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<span>Formation</span> </div> </a> <button aria-controls="toc-Formation-sublist" class="cdx-button cdx-button--weight-quiet cdx-button--icon-only vector-toc-toggle"> <span class="vector-icon mw-ui-icon-wikimedia-expand"></span> <span>Toggle Formation subsection</span> </button> <ul id="toc-Formation-sublist" class="vector-toc-list"> <li id="toc-IS_(investment–saving)_curve" class="vector-toc-list-item vector-toc-level-2"> <a class="vector-toc-link" href="#IS_(investment–saving)_curve"> <div class="vector-toc-text"> <span class="vector-toc-numb">2.1</span> <span>IS (investment–saving) curve</span> </div> </a> <ul id="toc-IS_(investment–saving)_curve-sublist" class="vector-toc-list"> </ul> </li> <li id="toc-LM_(liquidity-money)_curve" class="vector-toc-list-item vector-toc-level-2"> <a class="vector-toc-link" href="#LM_(liquidity-money)_curve"> <div class="vector-toc-text"> <span class="vector-toc-numb">2.2</span> <span>LM (liquidity-money) curve</span> </div> </a> <ul id="toc-LM_(liquidity-money)_curve-sublist" class="vector-toc-list"> </ul> </li> </ul> </li> <li id="toc-Shifts" class="vector-toc-list-item vector-toc-level-1 vector-toc-list-item-expanded"> <a class="vector-toc-link" href="#Shifts"> <div class="vector-toc-text"> <span class="vector-toc-numb">3</span> <span>Shifts</span> </div> </a> <ul id="toc-Shifts-sublist" class="vector-toc-list"> </ul> </li> <li id="toc-IS–LM_model_with_interest_targeting_central_bank" class="vector-toc-list-item vector-toc-level-1 vector-toc-list-item-expanded"> <a class="vector-toc-link" href="#IS–LM_model_with_interest_targeting_central_bank"> <div class="vector-toc-text"> <span class="vector-toc-numb">4</span> <span>IS–LM model with interest targeting central bank</span> </div> </a> <ul id="toc-IS–LM_model_with_interest_targeting_central_bank-sublist" class="vector-toc-list"> </ul> </li> <li id="toc-Incorporation_into_larger_models" class="vector-toc-list-item vector-toc-level-1 vector-toc-list-item-expanded"> <a class="vector-toc-link" href="#Incorporation_into_larger_models"> <div class="vector-toc-text"> <span class="vector-toc-numb">5</span> <span>Incorporation into larger models</span> </div> </a> <button aria-controls="toc-Incorporation_into_larger_models-sublist" class="cdx-button cdx-button--weight-quiet cdx-button--icon-only vector-toc-toggle"> <span class="vector-icon mw-ui-icon-wikimedia-expand"></span> <span>Toggle Incorporation into larger models subsection</span> </button> <ul id="toc-Incorporation_into_larger_models-sublist" class="vector-toc-list"> <li id="toc-AD-AS-like_models_with_inflation_instead_of_price_levels" class="vector-toc-list-item vector-toc-level-2"> <a class="vector-toc-link" href="#AD-AS-like_models_with_inflation_instead_of_price_levels"> <div class="vector-toc-text"> <span class="vector-toc-numb">5.1</span> <span>AD-AS-like models with inflation instead of price levels</span> </div> </a> <ul id="toc-AD-AS-like_models_with_inflation_instead_of_price_levels-sublist" class="vector-toc-list"> </ul> </li> </ul> </li> <li id="toc-Variations" class="vector-toc-list-item vector-toc-level-1 vector-toc-list-item-expanded"> <a class="vector-toc-link" href="#Variations"> <div class="vector-toc-text"> <span class="vector-toc-numb">6</span> <span>Variations</span> </div> </a> <button aria-controls="toc-Variations-sublist" class="cdx-button cdx-button--weight-quiet cdx-button--icon-only vector-toc-toggle"> <span class="vector-icon mw-ui-icon-wikimedia-expand"></span> <span>Toggle Variations subsection</span> </button> <ul id="toc-Variations-sublist" class="vector-toc-list"> <li id="toc-IS-LM-NAC_model" class="vector-toc-list-item vector-toc-level-2"> <a class="vector-toc-link" href="#IS-LM-NAC_model"> <div class="vector-toc-text"> <span class="vector-toc-numb">6.1</span> <span>IS-LM-NAC model</span> </div> </a> <ul id="toc-IS-LM-NAC_model-sublist" class="vector-toc-list"> </ul> </li> </ul> </li> <li id="toc-See_also" class="vector-toc-list-item vector-toc-level-1 vector-toc-list-item-expanded"> <a class="vector-toc-link" href="#See_also"> <div class="vector-toc-text"> <span class="vector-toc-numb">7</span> <span>See also</span> </div> </a> <ul id="toc-See_also-sublist" class="vector-toc-list"> </ul> </li> <li id="toc-References" class="vector-toc-list-item vector-toc-level-1 vector-toc-list-item-expanded"> <a class="vector-toc-link" href="#References"> <div class="vector-toc-text"> <span class="vector-toc-numb">8</span> <span>References</span> </div> </a> <ul id="toc-References-sublist" class="vector-toc-list"> </ul> </li> <li id="toc-Further_reading" class="vector-toc-list-item vector-toc-level-1 vector-toc-list-item-expanded"> <a class="vector-toc-link" href="#Further_reading"> <div class="vector-toc-text"> <span class="vector-toc-numb">9</span> <span>Further reading</span> </div> </a> <ul id="toc-Further_reading-sublist" class="vector-toc-list"> </ul> </li> <li id="toc-External_links" class="vector-toc-list-item vector-toc-level-1 vector-toc-list-item-expanded"> <a class="vector-toc-link" href="#External_links"> <div class="vector-toc-text"> <span class="vector-toc-numb">10</span> <span>External links</span> </div> </a> <ul id="toc-External_links-sublist" class="vector-toc-list"> </ul> </li> </ul> </div> </div> </nav> </div> </div> <div class="mw-content-container"> <main id="content" class="mw-body"> <header class="mw-body-header vector-page-titlebar"> <nav aria-label="Contents" class="vector-toc-landmark"> <div id="vector-page-titlebar-toc" class="vector-dropdown vector-page-titlebar-toc vector-button-flush-left" title="Table of Contents" > <input type="checkbox" id="vector-page-titlebar-toc-checkbox" role="button" aria-haspopup="true" data-event-name="ui.dropdown-vector-page-titlebar-toc" class="vector-dropdown-checkbox " aria-label="Toggle the table of contents" > <label id="vector-page-titlebar-toc-label" 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Available in 36 languages" > <label id="p-lang-btn-label" for="p-lang-btn-checkbox" class="vector-dropdown-label cdx-button cdx-button--fake-button cdx-button--fake-button--enabled cdx-button--weight-quiet cdx-button--action-progressive mw-portlet-lang-heading-36" aria-hidden="true" ><span class="vector-icon mw-ui-icon-language-progressive mw-ui-icon-wikimedia-language-progressive"></span> <span class="vector-dropdown-label-text">36 languages</span> </label> <div class="vector-dropdown-content"> <div class="vector-menu-content"> <ul class="vector-menu-content-list"> <li class="interlanguage-link interwiki-ar mw-list-item"><a href="https://ar.wikipedia.org/wiki/%D9%86%D9%85%D9%88%D8%B0%D8%AC_IS-LM" title="نموذج IS-LM – Arabic" lang="ar" hreflang="ar" data-title="نموذج IS-LM" data-language-autonym="العربية" data-language-local-name="Arabic" class="interlanguage-link-target"><span>العربية</span></a></li><li class="interlanguage-link interwiki-az mw-list-item"><a href="https://az.wikipedia.org/wiki/IS-LM_modeli" title="IS-LM modeli – Azerbaijani" lang="az" hreflang="az" data-title="IS-LM modeli" data-language-autonym="Azərbaycanca" data-language-local-name="Azerbaijani" class="interlanguage-link-target"><span>Azərbaycanca</span></a></li><li class="interlanguage-link interwiki-ca mw-list-item"><a href="https://ca.wikipedia.org/wiki/Model_IS-LM" title="Model IS-LM – Catalan" lang="ca" hreflang="ca" data-title="Model IS-LM" data-language-autonym="Català" data-language-local-name="Catalan" class="interlanguage-link-target"><span>Català</span></a></li><li class="interlanguage-link interwiki-cs mw-list-item"><a href="https://cs.wikipedia.org/wiki/IS-LM_model" title="IS-LM model – Czech" lang="cs" hreflang="cs" data-title="IS-LM model" data-language-autonym="Čeština" data-language-local-name="Czech" class="interlanguage-link-target"><span>Čeština</span></a></li><li class="interlanguage-link interwiki-co mw-list-item"><a href="https://co.wikipedia.org/wiki/Mudellu_IS-LM" title="Mudellu IS-LM – Corsican" lang="co" hreflang="co" data-title="Mudellu IS-LM" data-language-autonym="Corsu" data-language-local-name="Corsican" class="interlanguage-link-target"><span>Corsu</span></a></li><li class="interlanguage-link interwiki-da mw-list-item"><a href="https://da.wikipedia.org/wiki/IS-LM-modellen" title="IS-LM-modellen – Danish" lang="da" hreflang="da" data-title="IS-LM-modellen" data-language-autonym="Dansk" data-language-local-name="Danish" class="interlanguage-link-target"><span>Dansk</span></a></li><li class="interlanguage-link interwiki-de mw-list-item"><a href="https://de.wikipedia.org/wiki/IS-LM-Modell" title="IS-LM-Modell – German" lang="de" hreflang="de" data-title="IS-LM-Modell" data-language-autonym="Deutsch" data-language-local-name="German" class="interlanguage-link-target"><span>Deutsch</span></a></li><li class="interlanguage-link interwiki-el mw-list-item"><a href="https://el.wikipedia.org/wiki/%CE%A5%CF%80%CF%8C%CE%B4%CE%B5%CE%B9%CE%B3%CE%BC%CE%B1_IS/LM" title="Υπόδειγμα IS/LM – Greek" lang="el" hreflang="el" data-title="Υπόδειγμα IS/LM" data-language-autonym="Ελληνικά" data-language-local-name="Greek" class="interlanguage-link-target"><span>Ελληνικά</span></a></li><li class="interlanguage-link interwiki-es mw-list-item"><a href="https://es.wikipedia.org/wiki/Modelo_IS-LM" title="Modelo IS-LM – Spanish" lang="es" hreflang="es" data-title="Modelo IS-LM" data-language-autonym="Español" data-language-local-name="Spanish" class="interlanguage-link-target"><span>Español</span></a></li><li class="interlanguage-link interwiki-fa mw-list-item"><a href="https://fa.wikipedia.org/wiki/%D9%85%D8%AF%D9%84_%D8%A2%DB%8C%E2%80%8C%D8%A7%D8%B3-%D8%A7%D9%84%E2%80%8C%D8%A7%D9%85" title="مدل آی‌اس-ال‌ام – Persian" lang="fa" hreflang="fa" data-title="مدل آی‌اس-ال‌ام" data-language-autonym="فارسی" data-language-local-name="Persian" class="interlanguage-link-target"><span>فارسی</span></a></li><li class="interlanguage-link interwiki-fr mw-list-item"><a href="https://fr.wikipedia.org/wiki/Mod%C3%A8le_IS/LM" title="Modèle IS/LM – French" lang="fr" hreflang="fr" data-title="Modèle IS/LM" data-language-autonym="Français" data-language-local-name="French" class="interlanguage-link-target"><span>Français</span></a></li><li class="interlanguage-link interwiki-ko mw-list-item"><a href="https://ko.wikipedia.org/wiki/IS-LM_%EB%AA%A8%ED%98%95" title="IS-LM 모형 – Korean" lang="ko" hreflang="ko" data-title="IS-LM 모형" data-language-autonym="한국어" data-language-local-name="Korean" class="interlanguage-link-target"><span>한국어</span></a></li><li class="interlanguage-link interwiki-hy mw-list-item"><a href="https://hy.wikipedia.org/wiki/IS%E2%80%93LM_%D5%B4%D5%B8%D5%A4%D5%A5%D5%AC" title="IS–LM մոդել – Armenian" lang="hy" hreflang="hy" data-title="IS–LM մոդել" data-language-autonym="Հայերեն" data-language-local-name="Armenian" class="interlanguage-link-target"><span>Հայերեն</span></a></li><li class="interlanguage-link interwiki-it mw-list-item"><a href="https://it.wikipedia.org/wiki/Modello_IS-LM" title="Modello IS-LM – Italian" lang="it" hreflang="it" data-title="Modello IS-LM" data-language-autonym="Italiano" data-language-local-name="Italian" class="interlanguage-link-target"><span>Italiano</span></a></li><li class="interlanguage-link interwiki-he mw-list-item"><a href="https://he.wikipedia.org/wiki/%D7%9E%D7%95%D7%93%D7%9C_IS-LM" title="מודל IS-LM – Hebrew" lang="he" hreflang="he" data-title="מודל IS-LM" data-language-autonym="עברית" data-language-local-name="Hebrew" class="interlanguage-link-target"><span>עברית</span></a></li><li class="interlanguage-link interwiki-lo mw-list-item"><a href="https://lo.wikipedia.org/wiki/%E0%BB%81%E0%BA%9A%E0%BA%9A%E0%BA%88%E0%BA%B3%E0%BA%A5%E0%BA%AD%E0%BA%87_IS/LM" title="ແບບຈຳລອງ IS/LM – Lao" lang="lo" hreflang="lo" data-title="ແບບຈຳລອງ IS/LM" data-language-autonym="ລາວ" data-language-local-name="Lao" class="interlanguage-link-target"><span>ລາວ</span></a></li><li class="interlanguage-link interwiki-lv mw-list-item"><a href="https://lv.wikipedia.org/wiki/IS/LM_modelis" title="IS/LM modelis – Latvian" lang="lv" hreflang="lv" data-title="IS/LM modelis" data-language-autonym="Latviešu" data-language-local-name="Latvian" class="interlanguage-link-target"><span>Latviešu</span></a></li><li class="interlanguage-link interwiki-lt mw-list-item"><a href="https://lt.wikipedia.org/wiki/IS/LM_modelis" title="IS/LM modelis – Lithuanian" lang="lt" hreflang="lt" data-title="IS/LM modelis" data-language-autonym="Lietuvių" data-language-local-name="Lithuanian" class="interlanguage-link-target"><span>Lietuvių</span></a></li><li class="interlanguage-link interwiki-hu mw-list-item"><a href="https://hu.wikipedia.org/wiki/IS-LM_modell" title="IS-LM modell – Hungarian" lang="hu" hreflang="hu" data-title="IS-LM modell" data-language-autonym="Magyar" data-language-local-name="Hungarian" class="interlanguage-link-target"><span>Magyar</span></a></li><li class="interlanguage-link interwiki-mk mw-list-item"><a href="https://mk.wikipedia.org/wiki/%D0%9C%D0%BE%D0%B4%D0%B5%D0%BB_IS-LM" title="Модел IS-LM – Macedonian" lang="mk" hreflang="mk" data-title="Модел IS-LM" data-language-autonym="Македонски" data-language-local-name="Macedonian" class="interlanguage-link-target"><span>Македонски</span></a></li><li class="interlanguage-link interwiki-nl mw-list-item"><a href="https://nl.wikipedia.org/wiki/IS-LM-model" title="IS-LM-model – Dutch" lang="nl" hreflang="nl" data-title="IS-LM-model" data-language-autonym="Nederlands" data-language-local-name="Dutch" class="interlanguage-link-target"><span>Nederlands</span></a></li><li class="interlanguage-link interwiki-ja mw-list-item"><a href="https://ja.wikipedia.org/wiki/IS-LM%E5%88%86%E6%9E%90" title="IS-LM分析 – Japanese" lang="ja" hreflang="ja" data-title="IS-LM分析" data-language-autonym="日本語" data-language-local-name="Japanese" class="interlanguage-link-target"><span>日本語</span></a></li><li class="interlanguage-link interwiki-no mw-list-item"><a href="https://no.wikipedia.org/wiki/IS/LM-modellen" title="IS/LM-modellen – Norwegian Bokmål" lang="nb" hreflang="nb" data-title="IS/LM-modellen" data-language-autonym="Norsk bokmål" data-language-local-name="Norwegian Bokmål" class="interlanguage-link-target"><span>Norsk bokmål</span></a></li><li class="interlanguage-link interwiki-nn mw-list-item"><a href="https://nn.wikipedia.org/wiki/IS/LM-modellen" title="IS/LM-modellen – Norwegian Nynorsk" lang="nn" hreflang="nn" data-title="IS/LM-modellen" data-language-autonym="Norsk nynorsk" data-language-local-name="Norwegian Nynorsk" class="interlanguage-link-target"><span>Norsk nynorsk</span></a></li><li class="interlanguage-link interwiki-pl mw-list-item"><a href="https://pl.wikipedia.org/wiki/Model_IS/LM" title="Model IS/LM – Polish" lang="pl" hreflang="pl" data-title="Model IS/LM" data-language-autonym="Polski" data-language-local-name="Polish" class="interlanguage-link-target"><span>Polski</span></a></li><li class="interlanguage-link interwiki-pt mw-list-item"><a href="https://pt.wikipedia.org/wiki/Modelo_IS/LM" title="Modelo IS/LM – Portuguese" lang="pt" hreflang="pt" data-title="Modelo IS/LM" data-language-autonym="Português" data-language-local-name="Portuguese" class="interlanguage-link-target"><span>Português</span></a></li><li class="interlanguage-link interwiki-ro mw-list-item"><a href="https://ro.wikipedia.org/wiki/Modelul_IS-LM" title="Modelul IS-LM – Romanian" lang="ro" hreflang="ro" data-title="Modelul IS-LM" data-language-autonym="Română" data-language-local-name="Romanian" class="interlanguage-link-target"><span>Română</span></a></li><li class="interlanguage-link interwiki-ru mw-list-item"><a href="https://ru.wikipedia.org/wiki/%D0%9C%D0%BE%D0%B4%D0%B5%D0%BB%D1%8C_IS-LM" title="Модель IS-LM – Russian" lang="ru" hreflang="ru" data-title="Модель IS-LM" data-language-autonym="Русский" data-language-local-name="Russian" class="interlanguage-link-target"><span>Русский</span></a></li><li class="interlanguage-link interwiki-sah mw-list-item"><a href="https://sah.wikipedia.org/wiki/IS/LM_%D0%BC%D0%BE%D0%B4%D0%B5%D0%BB%D1%8D" title="IS/LM моделэ – Yakut" lang="sah" hreflang="sah" data-title="IS/LM моделэ" data-language-autonym="Саха тыла" data-language-local-name="Yakut" class="interlanguage-link-target"><span>Саха тыла</span></a></li><li class="interlanguage-link interwiki-simple mw-list-item"><a href="https://simple.wikipedia.org/wiki/IS/LM_model" title="IS/LM model – Simple English" lang="en-simple" hreflang="en-simple" data-title="IS/LM model" data-language-autonym="Simple English" data-language-local-name="Simple English" class="interlanguage-link-target"><span>Simple English</span></a></li><li class="interlanguage-link interwiki-fi mw-list-item"><a href="https://fi.wikipedia.org/wiki/IS-LM-malli" title="IS-LM-malli – Finnish" lang="fi" hreflang="fi" data-title="IS-LM-malli" data-language-autonym="Suomi" data-language-local-name="Finnish" class="interlanguage-link-target"><span>Suomi</span></a></li><li class="interlanguage-link interwiki-sv mw-list-item"><a href="https://sv.wikipedia.org/wiki/IS/LM-modellen" title="IS/LM-modellen – Swedish" lang="sv" hreflang="sv" data-title="IS/LM-modellen" data-language-autonym="Svenska" data-language-local-name="Swedish" class="interlanguage-link-target"><span>Svenska</span></a></li><li class="interlanguage-link interwiki-tr mw-list-item"><a href="https://tr.wikipedia.org/wiki/IS-LM_modeli" title="IS-LM modeli – Turkish" lang="tr" hreflang="tr" data-title="IS-LM modeli" data-language-autonym="Türkçe" data-language-local-name="Turkish" class="interlanguage-link-target"><span>Türkçe</span></a></li><li class="interlanguage-link interwiki-uk mw-list-item"><a href="https://uk.wikipedia.org/wiki/%D0%9C%D0%BE%D0%B4%D0%B5%D0%BB%D1%8C_IS-LM" title="Модель IS-LM – Ukrainian" lang="uk" hreflang="uk" data-title="Модель IS-LM" data-language-autonym="Українська" data-language-local-name="Ukrainian" class="interlanguage-link-target"><span>Українська</span></a></li><li class="interlanguage-link interwiki-vi mw-list-item"><a href="https://vi.wikipedia.org/wiki/M%C3%B4_h%C3%ACnh_IS%E2%80%93LM" title="Mô hình IS–LM – Vietnamese" lang="vi" hreflang="vi" data-title="Mô hình IS–LM" data-language-autonym="Tiếng Việt" data-language-local-name="Vietnamese" class="interlanguage-link-target"><span>Tiếng Việt</span></a></li><li class="interlanguage-link interwiki-zh mw-list-item"><a href="https://zh.wikipedia.org/wiki/IS-LM%E6%A8%A1%E5%9E%8B" title="IS-LM模型 – Chinese" lang="zh" hreflang="zh" data-title="IS-LM模型" data-language-autonym="中文" data-language-local-name="Chinese" class="interlanguage-link-target"><span>中文</span></a></li> </ul> <div class="after-portlet after-portlet-lang"><span class="wb-langlinks-edit wb-langlinks-link"><a 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id="mw-content-subtitle"></div></div> <div id="mw-content-text" class="mw-body-content"><div class="mw-content-ltr mw-parser-output" lang="en" dir="ltr"><div class="shortdescription nomobile noexcerpt noprint searchaux" style="display:none">Macroeconomic model relating interest rates and asset market</div> <figure class="skin-invert-image" typeof="mw:File/Thumb"><a href="/wiki/File:Islm.svg" class="mw-file-description"><img src="//upload.wikimedia.org/wikipedia/commons/thumb/b/b9/Islm.svg/270px-Islm.svg.png" decoding="async" width="270" height="270" class="mw-file-element" srcset="//upload.wikimedia.org/wikipedia/commons/thumb/b/b9/Islm.svg/405px-Islm.svg.png 1.5x, //upload.wikimedia.org/wikipedia/commons/thumb/b/b9/Islm.svg/540px-Islm.svg.png 2x" data-file-width="400" data-file-height="400" /></a><figcaption>The IS curve moves to the right, causing higher interest rates (i) and expansion in the "real" economy (real GDP, or Y)</figcaption></figure><style 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.sidebar{width:100%!important;clear:both;float:none!important;margin-left:0!important;margin-right:0!important}}body.skin--responsive .mw-parser-output .sidebar a>img{max-width:none!important}@media screen{html.skin-theme-clientpref-night .mw-parser-output .sidebar:not(.notheme) .sidebar-list-title,html.skin-theme-clientpref-night .mw-parser-output .sidebar:not(.notheme) .sidebar-title-with-pretitle{background:transparent!important}html.skin-theme-clientpref-night .mw-parser-output .sidebar:not(.notheme) .sidebar-title-with-pretitle a{color:var(--color-progressive)!important}}@media screen and (prefers-color-scheme:dark){html.skin-theme-clientpref-os .mw-parser-output .sidebar:not(.notheme) .sidebar-list-title,html.skin-theme-clientpref-os .mw-parser-output .sidebar:not(.notheme) .sidebar-title-with-pretitle{background:transparent!important}html.skin-theme-clientpref-os .mw-parser-output .sidebar:not(.notheme) .sidebar-title-with-pretitle a{color:var(--color-progressive)!important}}@media print{body.ns-0 .mw-parser-output .sidebar{display:none!important}}</style><table class="sidebar sidebar-collapse nomobile nowraplinks"><tbody><tr><td class="sidebar-pretitle">Part of <a href="/wiki/Category:Macroeconomics" title="Category:Macroeconomics">a series</a> on</td></tr><tr><th class="sidebar-title-with-pretitle"><a href="/wiki/Macroeconomics" title="Macroeconomics">Macroeconomics</a></th></tr><tr><td class="sidebar-image" style="padding-top:0.6em;"><span class="notpageimage" typeof="mw:File"><a href="/wiki/File:Ec_8_(26088200676)_(cropped).jpg" class="mw-file-description"><img alt="Federal Reserve" src="//upload.wikimedia.org/wikipedia/commons/thumb/8/8f/Ec_8_%2826088200676%29_%28cropped%29.jpg/220px-Ec_8_%2826088200676%29_%28cropped%29.jpg" decoding="async" width="220" height="150" class="mw-file-element" srcset="//upload.wikimedia.org/wikipedia/commons/thumb/8/8f/Ec_8_%2826088200676%29_%28cropped%29.jpg/330px-Ec_8_%2826088200676%29_%28cropped%29.jpg 1.5x, //upload.wikimedia.org/wikipedia/commons/thumb/8/8f/Ec_8_%2826088200676%29_%28cropped%29.jpg/440px-Ec_8_%2826088200676%29_%28cropped%29.jpg 2x" data-file-width="2400" data-file-height="1633" /></a></span></td></tr><tr><td class="sidebar-content"> <div class="sidebar-list mw-collapsible mw-collapsed"><div class="sidebar-list-title" style="background:transparent;border-top:1px solid #aaa;text-align:center;;color: var(--color-base)">Basic concepts</div><div class="sidebar-list-content mw-collapsible-content hlist"> <ul><li><a href="/wiki/Aggregate_demand" title="Aggregate demand">Aggregate demand</a></li> <li><a href="/wiki/Aggregate_supply" title="Aggregate supply">Aggregate supply</a></li> <li><a href="/wiki/Business_cycle" title="Business cycle">Business cycle</a></li> <li><a href="/wiki/Compound_annual_growth_rate" title="Compound annual growth rate">CAGR</a></li> <li><a href="/wiki/Deflation" title="Deflation">Deflation</a></li> <li><a href="/wiki/Demand_shock" title="Demand shock">Demand shock</a></li> <li><a href="/wiki/Disinflation" title="Disinflation">Disinflation</a></li> <li><a href="/wiki/Effective_demand" title="Effective demand">Effective demand</a></li> <li>Expectations <ul><li><a href="/wiki/Adaptive_expectations" title="Adaptive expectations">Adaptive</a></li> <li><a href="/wiki/Rational_expectations" title="Rational expectations">Rational</a></li></ul></li> <li><a href="/wiki/Financial_crisis" title="Financial crisis">Financial crisis</a></li> <li><a href="/wiki/Economic_growth" title="Economic growth">Growth</a></li> <li><a href="/wiki/Inflation" title="Inflation">Inflation</a> <ul><li><a href="/wiki/Demand-pull_inflation" title="Demand-pull inflation">Demand-pull</a></li> <li><a href="/wiki/Cost-push_inflation" title="Cost-push inflation">Cost-push</a></li></ul></li> <li><a href="/wiki/Interest_rate" title="Interest rate">Interest rate</a></li> <li><a href="/wiki/Investment_(macroeconomics)" title="Investment (macroeconomics)">Investment</a></li> <li><a href="/wiki/Liquidity_trap" title="Liquidity trap">Liquidity trap</a></li> <li><a href="/wiki/Measures_of_national_income_and_output" title="Measures of national income and output">Measures of national income and output</a> <ul><li><a href="/wiki/Gross_domestic_product" title="Gross domestic product">GDP</a></li> <li><a href="/wiki/Gross_national_income" title="Gross national income">GNI</a></li> <li><a href="/wiki/Net_national_income" title="Net national income">NNI</a></li></ul></li> <li><a href="/wiki/Microfoundations" title="Microfoundations">Microfoundations</a></li> <li><a href="/wiki/Money" title="Money">Money</a> <ul><li><a href="/wiki/Endogenous_money" title="Endogenous money">Endogenous</a></li></ul></li> <li><a href="/wiki/Money_creation" title="Money creation">Money creation</a></li> <li><a href="/wiki/Demand_for_money" title="Demand for money">Demand for money</a> <ul><li><a href="/wiki/Liquidity_preference" title="Liquidity preference">Liquidity preference</a></li></ul></li> <li><a href="/wiki/Money_supply" title="Money supply">Money supply</a></li> <li><a href="/wiki/National_accounts" title="National accounts">National accounts</a> <ul><li><a href="/wiki/System_of_National_Accounts" title="System of National Accounts">SNA</a></li></ul></li> <li><a href="/wiki/Nominal_rigidity" title="Nominal rigidity">Nominal rigidity</a></li> <li><a href="/wiki/Price_level" title="Price level">Price level</a></li> <li><a href="/wiki/Recession" title="Recession">Recession</a></li> <li><a href="/wiki/Shrinkflation" title="Shrinkflation">Shrinkflation</a></li> <li><a href="/wiki/Stagflation" title="Stagflation">Stagflation</a></li> <li><a href="/wiki/Supply_shock" title="Supply shock">Supply shock</a></li> <li><a href="/wiki/National_saving" title="National saving">Saving</a></li> <li><a href="/wiki/Unemployment" title="Unemployment">Unemployment</a></li></ul> </div></div></td> </tr><tr><td class="sidebar-content"> <div class="sidebar-list mw-collapsible mw-collapsed"><div class="sidebar-list-title" style="background:transparent;border-top:1px solid #aaa;text-align:center;;color: var(--color-base)">Policies</div><div class="sidebar-list-content mw-collapsible-content hlist"> <ul><li><a href="/wiki/Fiscal_policy" title="Fiscal policy">Fiscal</a></li> <li><a href="/wiki/Monetary_policy" title="Monetary policy">Monetary</a></li> <li><a href="/wiki/Commercial_policy" title="Commercial policy">Commercial</a></li> <li><a href="/wiki/Central_bank" title="Central bank">Central bank</a></li> <li><a href="/wiki/Universal_basic_income" title="Universal basic income">Universal basic income</a></li></ul> </div></div></td> </tr><tr><td class="sidebar-content"> <div class="sidebar-list mw-collapsible mw-collapsed"><div class="sidebar-list-title" style="background:transparent;border-top:1px solid #aaa;text-align:center;;color: var(--color-base)">Models</div><div class="sidebar-list-content mw-collapsible-content hlist"> <ul><li><a class="mw-selflink selflink">IS–LM</a></li> <li><a href="/wiki/AD%E2%80%93AS_model" title="AD–AS model">AD–AS</a></li> <li><a href="/wiki/Keynesian_cross" title="Keynesian cross">Keynesian cross</a></li> <li><a href="/wiki/Multiplier_(economics)" title="Multiplier (economics)">Multiplier</a></li> <li><a href="/wiki/Accelerator_effect" title="Accelerator effect">Accelerator</a></li> <li><a href="/wiki/Phillips_curve" title="Phillips curve">Phillips curve</a></li> <li><a href="/wiki/Arrow%E2%80%93Debreu_model" title="Arrow–Debreu model">Arrow–Debreu</a></li> <li><a href="/wiki/Harrod%E2%80%93Domar_model" title="Harrod–Domar model">Harrod–Domar</a></li> <li><a href="/wiki/Solow%E2%80%93Swan_model" title="Solow–Swan model">Solow–Swan</a></li> <li><a href="/wiki/Ramsey%E2%80%93Cass%E2%80%93Koopmans_model" title="Ramsey–Cass–Koopmans model">Ramsey–Cass–Koopmans</a></li> <li><a href="/wiki/Overlapping_generations_model" title="Overlapping generations model">Overlapping generations</a></li> <li><a href="/wiki/General_equilibrium_theory" title="General equilibrium theory">General equilibrium</a> <ul><li><a href="/wiki/Dynamic_stochastic_general_equilibrium" title="Dynamic stochastic general equilibrium">DSGE</a></li></ul></li> <li><a href="/wiki/Endogenous_growth_theory" title="Endogenous growth theory">Endogenous growth</a></li> <li><a href="/wiki/Matching_theory_(economics)" class="mw-redirect" title="Matching theory (economics)">Matching theory</a></li> <li><a href="/wiki/Mundell%E2%80%93Fleming_model" title="Mundell–Fleming model">Mundell–Fleming</a></li> <li><a href="/wiki/Overshooting_model" title="Overshooting model">Overshooting</a></li> <li><a href="/wiki/NAIRU" title="NAIRU">NAIRU</a></li></ul> </div></div></td> </tr><tr><td class="sidebar-content"> <div class="sidebar-list mw-collapsible mw-collapsed"><div class="sidebar-list-title" style="background:transparent;border-top:1px solid #aaa;text-align:center;;color: var(--color-base)">Related fields</div><div class="sidebar-list-content mw-collapsible-content hlist"> <ul><li><a href="/wiki/Econometrics" title="Econometrics">Econometrics</a></li> <li><a href="/wiki/Economic_statistics" title="Economic statistics">Economic statistics</a></li> <li><a href="/wiki/Monetary_economics" title="Monetary economics">Monetary economics</a></li> <li><a href="/wiki/Development_economics" title="Development economics">Development economics</a></li> <li><a href="/wiki/Evolutionary_economics" title="Evolutionary economics">Evolutionary economics</a></li> <li><a href="/wiki/International_economics" title="International economics">International economics</a></li></ul> </div></div></td> </tr><tr><td class="sidebar-content"> <div class="sidebar-list mw-collapsible mw-collapsed"><div class="sidebar-list-title" style="background:transparent;border-top:1px solid #aaa;text-align:center;;color: var(--color-base)"><a href="/wiki/History_of_macroeconomic_thought" title="History of macroeconomic thought">Schools</a></div><div class="sidebar-list-content mw-collapsible-content hlist"><i>Mainstream</i> <ul><li><a href="/wiki/Keynesian_economics" title="Keynesian economics">Keynesian</a> <ul><li><a href="/wiki/Neo-Keynesian_economics" class="mw-redirect" title="Neo-Keynesian economics">Neo-</a></li> <li><a href="/wiki/New_Keynesian_economics" title="New Keynesian economics">New</a></li></ul></li> <li><a href="/wiki/Monetarism" title="Monetarism">Monetarism</a></li> <li><a href="/wiki/New_classical_macroeconomics" title="New classical macroeconomics">New classical</a> <ul><li><a href="/wiki/Real_business-cycle_theory" title="Real business-cycle theory">Real business-cycle theory</a></li></ul></li> <li><a href="/wiki/Stockholm_school_(economics)" class="mw-redirect" title="Stockholm school (economics)">Stockholm</a></li> <li><a href="/wiki/New_neoclassical_synthesis" title="New neoclassical synthesis">New neoclassical synthesis</a></li> <li><a href="/wiki/Saltwater_and_freshwater_economics" title="Saltwater and freshwater economics">Saltwater and freshwater</a></li></ul> <p><i>Heterodox</i> </p> <ul><li><a href="/wiki/Austrian_School" class="mw-redirect" title="Austrian School">Austrian</a></li> <li><a href="/wiki/Chartalism" title="Chartalism">Chartalism</a> <ul><li><a href="/wiki/Modern_monetary_theory" title="Modern monetary theory">Modern monetary theory</a></li></ul></li> <li><a href="/wiki/Ecological_economics" title="Ecological economics">Ecological</a></li> <li><a href="/wiki/Post-Keynesian_economics" title="Post-Keynesian economics">Post-Keynesian</a> <ul><li><a href="/wiki/Monetary_circuit_theory" title="Monetary circuit theory">Circuitism</a></li></ul></li> <li><a href="/wiki/Disequilibrium_macroeconomics" title="Disequilibrium macroeconomics">Disequilibrium</a></li> <li><a href="/wiki/Marxian_economics" title="Marxian economics">Marxian</a></li> <li><a href="/wiki/Market_monetarism" title="Market monetarism">Market monetarism</a></li> <li><a href="/wiki/Supply-side_economics" title="Supply-side economics">Supply-side</a></li></ul> </div></div></td> </tr><tr><td class="sidebar-content"> <div class="sidebar-list mw-collapsible mw-collapsed"><div class="sidebar-list-title" style="background:transparent;border-top:1px solid #aaa;text-align:center;;color: var(--color-base)"><a href="/wiki/Category:Macroeconomists" title="Category:Macroeconomists">People</a></div><div class="sidebar-list-content mw-collapsible-content hlist"> <ul><li><a href="/wiki/Fran%C3%A7ois_Quesnay" title="François Quesnay">François Quesnay</a></li> <li><a href="/wiki/Adam_Smith" title="Adam Smith">Adam Smith</a></li> <li><a href="/wiki/Thomas_Robert_Malthus" title="Thomas Robert Malthus">Thomas Robert Malthus</a></li> <li><a href="/wiki/Karl_Marx" title="Karl Marx">Karl Marx</a></li> <li><a href="/wiki/L%C3%A9on_Walras" title="Léon Walras">Léon Walras</a></li> <li><a href="/wiki/Knut_Wicksell" title="Knut Wicksell">Knut Wicksell</a></li> <li><a href="/wiki/Irving_Fisher" title="Irving Fisher">Irving Fisher</a></li> <li><a href="/wiki/Wesley_Clair_Mitchell" title="Wesley Clair Mitchell">Wesley Clair Mitchell</a></li> <li><a href="/wiki/John_Maynard_Keynes" title="John Maynard Keynes">John Maynard Keynes</a></li> <li><a href="/wiki/Alvin_Hansen" title="Alvin Hansen">Alvin Hansen</a></li> <li><a href="/wiki/Micha%C5%82_Kalecki" title="Michał Kalecki">Michał Kalecki</a></li> <li><a href="/wiki/Gunnar_Myrdal" title="Gunnar Myrdal">Gunnar Myrdal</a></li> <li><a href="/wiki/Simon_Kuznets" title="Simon Kuznets">Simon Kuznets</a></li> <li><a href="/wiki/Joan_Robinson" title="Joan Robinson">Joan Robinson</a></li> <li><a href="/wiki/Friedrich_Hayek" title="Friedrich Hayek">Friedrich Hayek</a></li> <li><a href="/wiki/John_Hicks" title="John Hicks">John Hicks</a></li> <li><a href="/wiki/Richard_Stone" title="Richard Stone">Richard Stone</a></li> <li><a href="/wiki/Hyman_Minsky" title="Hyman Minsky">Hyman Minsky</a></li> <li><a href="/wiki/Milton_Friedman" title="Milton Friedman">Milton Friedman</a></li> <li><a href="/wiki/Paul_Samuelson" title="Paul Samuelson">Paul Samuelson</a></li> <li><a href="/wiki/Lawrence_Klein" title="Lawrence Klein">Lawrence Klein</a></li> <li><a href="/wiki/Edmund_Phelps" title="Edmund Phelps">Edmund Phelps</a></li> <li><a href="/wiki/Robert_Lucas_Jr." title="Robert Lucas Jr.">Robert Lucas Jr.</a></li> <li><a href="/wiki/Edward_C._Prescott" title="Edward C. Prescott">Edward C. Prescott</a></li> <li><a href="/wiki/Peter_Diamond" title="Peter Diamond">Peter Diamond</a></li> <li><a href="/wiki/William_Nordhaus" title="William Nordhaus">William Nordhaus</a></li> <li><a href="/wiki/Joseph_Stiglitz" title="Joseph Stiglitz">Joseph Stiglitz</a></li> <li><a href="/wiki/Thomas_J._Sargent" title="Thomas J. Sargent">Thomas J. Sargent</a></li> <li><a href="/wiki/Paul_Krugman" title="Paul Krugman">Paul Krugman</a></li> <li><a href="/wiki/Greg_Mankiw" title="Greg Mankiw">N. Gregory Mankiw</a></li></ul> </div></div></td> </tr><tr><td class="sidebar-content"> <div class="sidebar-list mw-collapsible mw-collapsed"><div class="sidebar-list-title" style="background:transparent;border-top:1px solid #aaa;text-align:center;;color: var(--color-base)">See also</div><div class="sidebar-list-content mw-collapsible-content hlist"> <ul><li><a href="/wiki/Macroeconomic_model" title="Macroeconomic model">Macroeconomic model</a></li> <li><a href="/wiki/List_of_important_publications_in_economics#Macroeconomics" title="List of important publications in economics">Publications in macroeconomics</a></li> <li><a href="/wiki/Economics" title="Economics">Economics</a> <ul><li><a href="/wiki/Applied_economics" title="Applied economics">Applied</a></li></ul></li> <li><a href="/wiki/Microeconomics" title="Microeconomics">Microeconomics</a></li> <li><a href="/wiki/Political_economy" title="Political economy">Political economy</a></li> <li><a href="/wiki/Mathematical_economics" title="Mathematical economics">Mathematical economics</a></li></ul> </div></div></td> </tr><tr><td class="sidebar-below plainlist"> <ul><li><span class="nowrap"><span class="noviewer" typeof="mw:File"><span><img alt="icon" src="//upload.wikimedia.org/wikipedia/commons/thumb/5/55/Bills_and_coins.svg/16px-Bills_and_coins.svg.png" decoding="async" width="16" height="8" class="mw-file-element" srcset="//upload.wikimedia.org/wikipedia/commons/thumb/5/55/Bills_and_coins.svg/24px-Bills_and_coins.svg.png 1.5x, //upload.wikimedia.org/wikipedia/commons/thumb/5/55/Bills_and_coins.svg/32px-Bills_and_coins.svg.png 2x" data-file-width="960" data-file-height="465" /></span></span> </span><a href="/wiki/Portal:Money" title="Portal:Money">Money portal</a></li> <li><span class="nowrap"><span class="noviewer" typeof="mw:File"><a href="/wiki/File:Emblem-money.svg" class="mw-file-description"><img alt="icon" src="//upload.wikimedia.org/wikipedia/commons/thumb/f/f3/Emblem-money.svg/16px-Emblem-money.svg.png" decoding="async" width="16" height="16" class="mw-file-element" srcset="//upload.wikimedia.org/wikipedia/commons/thumb/f/f3/Emblem-money.svg/24px-Emblem-money.svg.png 1.5x, //upload.wikimedia.org/wikipedia/commons/thumb/f/f3/Emblem-money.svg/32px-Emblem-money.svg.png 2x" data-file-width="48" data-file-height="48" /></a></span> </span><a href="/wiki/Portal:Business" title="Portal:Business">Business portal</a></li></ul></td></tr><tr><td class="sidebar-navbar"><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1129693374" /><style data-mw-deduplicate="TemplateStyles:r1239400231">.mw-parser-output .navbar{display:inline;font-size:88%;font-weight:normal}.mw-parser-output .navbar-collapse{float:left;text-align:left}.mw-parser-output .navbar-boxtext{word-spacing:0}.mw-parser-output .navbar ul{display:inline-block;white-space:nowrap;line-height:inherit}.mw-parser-output .navbar-brackets::before{margin-right:-0.125em;content:"[ "}.mw-parser-output .navbar-brackets::after{margin-left:-0.125em;content:" ]"}.mw-parser-output .navbar li{word-spacing:-0.125em}.mw-parser-output .navbar a>span,.mw-parser-output .navbar a>abbr{text-decoration:inherit}.mw-parser-output .navbar-mini abbr{font-variant:small-caps;border-bottom:none;text-decoration:none;cursor:inherit}.mw-parser-output .navbar-ct-full{font-size:114%;margin:0 7em}.mw-parser-output .navbar-ct-mini{font-size:114%;margin:0 4em}html.skin-theme-clientpref-night .mw-parser-output .navbar li a abbr{color:var(--color-base)!important}@media(prefers-color-scheme:dark){html.skin-theme-clientpref-os .mw-parser-output .navbar li a abbr{color:var(--color-base)!important}}@media print{.mw-parser-output .navbar{display:none!important}}</style><div class="navbar plainlinks hlist navbar-mini"><ul><li class="nv-view"><a href="/wiki/Template:Macroeconomics_sidebar" title="Template:Macroeconomics sidebar"><abbr title="View this template">v</abbr></a></li><li class="nv-talk"><a href="/wiki/Template_talk:Macroeconomics_sidebar" title="Template talk:Macroeconomics sidebar"><abbr title="Discuss this template">t</abbr></a></li><li class="nv-edit"><a href="/wiki/Special:EditPage/Template:Macroeconomics_sidebar" title="Special:EditPage/Template:Macroeconomics sidebar"><abbr title="Edit this template">e</abbr></a></li></ul></div></td></tr></tbody></table> <p>The <b>IS–LM model</b>, or <b>Hicks–Hansen model</b>, is a two-dimensional <a href="/wiki/Macroeconomic_model" title="Macroeconomic model">macroeconomic model</a> which is used as a pedagogical tool in macroeconomic teaching. The IS–LM model shows the relationship between <a href="/wiki/Interest_rate" title="Interest rate">interest rates</a> and <a href="/wiki/Output_(economics)" title="Output (economics)">output</a> in the short run in a <a href="/wiki/Closed_economy" class="mw-redirect" title="Closed economy">closed economy</a>. The intersection of the "<a href="/wiki/Investment_(macroeconomics)" title="Investment (macroeconomics)">investment</a>–<a href="/wiki/National_saving" title="National saving">saving</a>" (IS) and "<a href="/wiki/Liquidity_preference" title="Liquidity preference">liquidity preference</a>–<a href="/wiki/Money_supply" title="Money supply">money supply</a>" (LM) curves illustrates a "<a href="/wiki/General_equilibrium_theory" title="General equilibrium theory">general equilibrium</a>" where supposed simultaneous equilibria occur in both the goods and the money markets. The IS–LM model shows the importance of various <a href="/wiki/Demand_shock" title="Demand shock">demand shocks</a> (including the effects of <a href="/wiki/Monetary_policy" title="Monetary policy">monetary policy</a> and <a href="/wiki/Fiscal_policy" title="Fiscal policy">fiscal policy</a>) on output and consequently offers an explanation of changes in <a href="/wiki/National_income" class="mw-redirect" title="National income">national income</a> in the short run when <a href="/wiki/Price_level" title="Price level">prices</a> are fixed or <a href="/wiki/Nominal_rigidity" title="Nominal rigidity">sticky</a>. Hence, the model can be used as a tool to suggest potential levels for appropriate stabilisation policies. It is also used as a building block for the demand side of the economy in more comprehensive models like the <a href="/wiki/AD%E2%80%93AS_model" title="AD–AS model">AD–AS model</a>. </p><p>The model was developed by <a href="/wiki/John_Hicks" title="John Hicks">John Hicks</a> in 1937 and was later extended by <a href="/wiki/Alvin_Hansen" title="Alvin Hansen">Alvin Hansen</a> as a mathematical representation of <a href="/wiki/Keynesian_economics" title="Keynesian economics">Keynesian macroeconomic theory</a>. Between the 1940s and mid-1970s, it was the leading framework of macroeconomic analysis. Today, it is generally accepted as being imperfect and is largely absent from teaching at advanced economic levels and from macroeconomic research, but it is still an important pedagogical introductory tool in most undergraduate macroeconomics textbooks. </p><p>As monetary policy since the 1980s and 1990s generally does not try to target money supply as assumed in the original IS–LM model, but instead targets interest rate levels directly, some modern versions of the model have changed the interpretation (and in some cases even the name) of the LM curve, presenting it instead simply as a horizontal line showing the central bank's choice of interest rate. This allows for a simpler dynamic adjustment and supposedly reflects the behaviour of actual contemporary central banks more closely. </p> <meta property="mw:PageProp/toc" /> <div class="mw-heading mw-heading2"><h2 id="History">History</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=IS%E2%80%93LM_model&action=edit&section=1" title="Edit section: History"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>The IS–LM model was introduced at a conference of the <a href="/wiki/Econometric_Society" title="Econometric Society">Econometric Society</a> held in Oxford during September 1936. <a href="/wiki/Roy_Harrod" title="Roy Harrod">Roy Harrod</a>, <a href="/wiki/John_Hicks" title="John Hicks">John R. Hicks</a>, and <a href="/wiki/James_Meade" title="James Meade">James Meade</a> all presented papers describing <a href="/wiki/Mathematical_model" title="Mathematical model">mathematical models</a> attempting to summarize <a href="/wiki/John_Maynard_Keynes" title="John Maynard Keynes">John Maynard Keynes</a>' <i><a href="/wiki/General_Theory_of_Employment,_Interest,_and_Money" class="mw-redirect" title="General Theory of Employment, Interest, and Money">General Theory of Employment, Interest, and Money</a></i>.<sup id="cite_ref-Hicks1937_1-0" class="reference"><a href="#cite_note-Hicks1937-1"><span class="cite-bracket">[</span>1<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-2" class="reference"><a href="#cite_note-2"><span class="cite-bracket">[</span>2<span class="cite-bracket">]</span></a></sup> Hicks, who had seen a draft of Harrod's paper, invented the IS–LM model (originally using the <a href="/wiki/Abbreviation" title="Abbreviation">abbreviation</a> "LL", not "LM"). He later presented it in "Mr. Keynes and the Classics: A Suggested Interpretation".<sup id="cite_ref-Hicks1937_1-1" class="reference"><a href="#cite_note-Hicks1937-1"><span class="cite-bracket">[</span>1<span class="cite-bracket">]</span></a></sup> Hicks and Alvin Hansen developed the model further in the 1930s and early 1940s,<sup id="cite_ref-blanchard_3-0" class="reference"><a href="#cite_note-blanchard-3"><span class="cite-bracket">[</span>3<span class="cite-bracket">]</span></a></sup><sup class="reference nowrap"><span title="Page / location: 527">: 527 </span></sup> Hansen extending the earlier contribution.<sup id="cite_ref-4" class="reference"><a href="#cite_note-4"><span class="cite-bracket">[</span>4<span class="cite-bracket">]</span></a></sup> The model became a central tool of macroeconomic teaching for many decades. Between the 1940s and mid-1970s, it was the leading framework of macroeconomic analysis.<sup id="cite_ref-5" class="reference"><a href="#cite_note-5"><span class="cite-bracket">[</span>5<span class="cite-bracket">]</span></a></sup> It was particularly suited to illustrate the debate of the 1960s and 1970s between Keynesians and monetarists as to whether fiscal or monetary policy was most effective to <a href="/wiki/Stabilization_policy" title="Stabilization policy">stabilize the economy</a>. Later, this issue faded from focus and came to play only a modest role in discussions of short-run fluctuations.<sup id="cite_ref-Romer_6-0" class="reference"><a href="#cite_note-Romer-6"><span class="cite-bracket">[</span>6<span class="cite-bracket">]</span></a></sup> </p><p>The IS-LM model assumes a fixed price level and consequently cannot in itself be used to analyze inflation. This was of little importance in the 1950s and early 1960s when inflation was not an important issue, but became problematic with the rising inflation levels in the late 1960s and 1970s, which led to extensions of the model to also incorporate <a href="/wiki/Aggregate_supply" title="Aggregate supply">aggregate supply</a> in some form, e.g. in the form of the <a href="/wiki/AD%E2%80%93AS_model" title="AD–AS model">AD–AS model</a>, which can be regarded as an IS-LM model with an added supply side explaining rises in the price level.<sup id="cite_ref-Romer_6-1" class="reference"><a href="#cite_note-Romer-6"><span class="cite-bracket">[</span>6<span class="cite-bracket">]</span></a></sup> </p><p>One of the basic assumptions of the IS-LM model is that the central bank targets the money supply.<sup id="cite_ref-Romer_6-2" class="reference"><a href="#cite_note-Romer-6"><span class="cite-bracket">[</span>6<span class="cite-bracket">]</span></a></sup> However, a fundamental rethinking in central bank policy took place from the early 1990s when central banks generally changed strategies towards targeting inflation rather than money growth and using an interest rate rule to achieve their goal.<sup id="cite_ref-blanchard_3-1" class="reference"><a href="#cite_note-blanchard-3"><span class="cite-bracket">[</span>3<span class="cite-bracket">]</span></a></sup><sup class="reference nowrap"><span title="Page / location: 507">: 507 </span></sup> As central banks started paying little attention to the money supply when deciding on their policy, this model feature became increasingly unrealistic and sometimes confusing to students.<sup id="cite_ref-Romer_6-3" class="reference"><a href="#cite_note-Romer-6"><span class="cite-bracket">[</span>6<span class="cite-bracket">]</span></a></sup> <a href="/wiki/David_Romer" title="David Romer">David Romer</a> in 2000 suggested replacing the traditional IS-LM framework with an <a href="/wiki/IS/MP_model" title="IS/MP model">IS-MP</a> model, replacing the positively sloped LM curve with a horizontal MP curve (where MP stands for "monetary policy"). He advocated that it had several advantages compared to the traditional IS-LM model.<sup id="cite_ref-Romer_6-4" class="reference"><a href="#cite_note-Romer-6"><span class="cite-bracket">[</span>6<span class="cite-bracket">]</span></a></sup> <a href="/wiki/John_B._Taylor" title="John B. Taylor">John B. Taylor</a> independently made a similar recommendation in the same year.<sup id="cite_ref-7" class="reference"><a href="#cite_note-7"><span class="cite-bracket">[</span>7<span class="cite-bracket">]</span></a></sup> After 2000, this has led to various modifications to the model in many textbooks, replacing the traditional LM curve and story of the central bank influencing the interest rate level indirectly via controlling the supply of money in the money market to a more realistic one of the central bank determining the policy interest rate as an exogenous variable directly.<sup id="cite_ref-blanchard_3-2" class="reference"><a href="#cite_note-blanchard-3"><span class="cite-bracket">[</span>3<span class="cite-bracket">]</span></a></sup><sup class="reference nowrap"><span title="Page / location: 113">: 113 </span></sup><sup id="cite_ref-8" class="reference"><a href="#cite_note-8"><span class="cite-bracket">[</span>8<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-SWJ_9-0" class="reference"><a href="#cite_note-SWJ-9"><span class="cite-bracket">[</span>9<span class="cite-bracket">]</span></a></sup> </p><p>Today, the IS-LM model is largely absent from macroeconomic research, but it is still a backbone conceptual introductory tool in many macroeconomics textbooks.<sup id="cite_ref-10" class="reference"><a href="#cite_note-10"><span class="cite-bracket">[</span>10<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-11" class="reference"><a href="#cite_note-11"><span class="cite-bracket">[</span>11<span class="cite-bracket">]</span></a></sup> </p> <div class="mw-heading mw-heading2"><h2 id="Formation">Formation</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=IS%E2%80%93LM_model&action=edit&section=2" title="Edit section: Formation"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>The point where the IS and LM schedules intersect represents a short-run <a href="/wiki/General_equilibrium" class="mw-redirect" title="General equilibrium">equilibrium</a> in the real and monetary sectors (though not necessarily in other sectors, such as labor markets): both the product market and the money market are in equilibrium.<sup id="cite_ref-12" class="reference"><a href="#cite_note-12"><span class="cite-bracket">[</span>12<span class="cite-bracket">]</span></a></sup> This equilibrium yields a unique combination of the interest rate and <a href="/wiki/Real_GDP" class="mw-redirect" title="Real GDP">real GDP</a>. </p> <div class="mw-heading mw-heading3"><h3 id="IS_(investment–saving)_curve"><span id="IS_.28investment.E2.80.93saving.29_curve"></span>IS (investment–saving) curve</h3><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=IS%E2%80%93LM_model&action=edit&section=3" title="Edit section: IS (investment–saving) curve"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <figure class="mw-default-size skin-invert-image" typeof="mw:File/Thumb"><a href="/wiki/File:I-S_and_Y%3DAD_to_IS_NT_Wiki.png" class="mw-file-description"><img src="//upload.wikimedia.org/wikipedia/commons/thumb/2/21/I-S_and_Y%3DAD_to_IS_NT_Wiki.png/220px-I-S_and_Y%3DAD_to_IS_NT_Wiki.png" decoding="async" width="220" height="199" class="mw-file-element" srcset="//upload.wikimedia.org/wikipedia/commons/thumb/2/21/I-S_and_Y%3DAD_to_IS_NT_Wiki.png/330px-I-S_and_Y%3DAD_to_IS_NT_Wiki.png 1.5x, //upload.wikimedia.org/wikipedia/commons/thumb/2/21/I-S_and_Y%3DAD_to_IS_NT_Wiki.png/440px-I-S_and_Y%3DAD_to_IS_NT_Wiki.png 2x" data-file-width="778" data-file-height="703" /></a><figcaption>IS curve represented by equilibrium in the capital market and Keynesian cross diagram.</figcaption></figure> <p>The IS curve shows the causation from interest rates to planned investment to national income and output. </p><p>For the investment–saving curve, the <a href="/wiki/Independent_variable" class="mw-redirect" title="Independent variable">independent variable</a> is the interest rate and the <a href="/wiki/Dependent_variable" class="mw-redirect" title="Dependent variable">dependent variable</a> is the level of income. The IS curve is drawn as downward-<a href="/wiki/Slope" title="Slope">sloping</a> with the interest rate <i>r</i> on the vertical axis and GDP (gross domestic product: <i>Y</i>) on the horizontal axis. The IS curve represents the <a href="/wiki/Locus_(mathematics)" title="Locus (mathematics)">locus</a> where total spending (<a href="/wiki/Consumer_spending" title="Consumer spending">consumer spending</a> + planned private investment + government purchases + net exports) equals total output (real income, <i>Y</i>, or GDP). </p><p>The IS curve also represents the equilibria where total private investment equals total saving, with saving equal to consumer saving <i>plus</i> government saving (the budget surplus) <i>plus</i> foreign saving (the trade surplus). The level of real GDP (Y) is determined along this line for each <a href="/wiki/Interest_rate" title="Interest rate">interest rate</a>. Every level of the real interest rate will generate a certain level of investment and spending: lower interest rates encourage higher investment and more spending. The <a href="/wiki/Multiplier_effect" class="mw-redirect" title="Multiplier effect">multiplier effect</a> of an increase in fixed investment resulting from a lower interest rate raises real GDP. This explains the downward slope of the IS curve. In summary, the IS curve shows the causation from interest rates to planned fixed investment to rising national income and output. </p><p>The IS curve is defined by the equation </p> <dl><dd><span class="mwe-math-element"><span class="mwe-math-mathml-inline mwe-math-mathml-a11y" style="display: none;"><math xmlns="http://www.w3.org/1998/Math/MathML" alttext="{\displaystyle Y=C\left({Y}-{T(Y)}\right)+I\left({r}\right)+G+NX(Y),}"> <semantics> <mrow class="MJX-TeXAtom-ORD"> <mstyle displaystyle="true" scriptlevel="0"> <mi>Y</mi> <mo>=</mo> <mi>C</mi> <mrow> <mo>(</mo> <mrow> <mrow class="MJX-TeXAtom-ORD"> <mi>Y</mi> </mrow> <mo>−</mo> <mrow class="MJX-TeXAtom-ORD"> <mi>T</mi> <mo stretchy="false">(</mo> <mi>Y</mi> <mo stretchy="false">)</mo> </mrow> </mrow> <mo>)</mo> </mrow> <mo>+</mo> <mi>I</mi> <mrow> <mo>(</mo> <mrow class="MJX-TeXAtom-ORD"> <mi>r</mi> </mrow> <mo>)</mo> </mrow> <mo>+</mo> <mi>G</mi> <mo>+</mo> <mi>N</mi> <mi>X</mi> <mo stretchy="false">(</mo> <mi>Y</mi> <mo stretchy="false">)</mo> <mo>,</mo> </mstyle> </mrow> <annotation encoding="application/x-tex">{\displaystyle Y=C\left({Y}-{T(Y)}\right)+I\left({r}\right)+G+NX(Y),}</annotation> </semantics> </math></span><img src="https://wikimedia.org/api/rest_v1/media/math/render/svg/51f8358e2cbf5e1dfa71090c2574d68a814db33a" class="mwe-math-fallback-image-inline mw-invert skin-invert" aria-hidden="true" style="vertical-align: -0.838ex; width:41.705ex; height:2.843ex;" alt="{\displaystyle Y=C\left({Y}-{T(Y)}\right)+I\left({r}\right)+G+NX(Y),}" /></span></dd></dl> <p>where <i>Y</i> represents income, <span class="mwe-math-element"><span class="mwe-math-mathml-inline mwe-math-mathml-a11y" style="display: none;"><math xmlns="http://www.w3.org/1998/Math/MathML" alttext="{\displaystyle C(Y-T(Y))}"> <semantics> <mrow class="MJX-TeXAtom-ORD"> <mstyle displaystyle="true" scriptlevel="0"> <mi>C</mi> <mo stretchy="false">(</mo> <mi>Y</mi> <mo>−</mo> <mi>T</mi> <mo stretchy="false">(</mo> <mi>Y</mi> <mo stretchy="false">)</mo> <mo stretchy="false">)</mo> </mstyle> </mrow> <annotation encoding="application/x-tex">{\displaystyle C(Y-T(Y))}</annotation> </semantics> </math></span><img src="https://wikimedia.org/api/rest_v1/media/math/render/svg/b9e9f0310a0e4359fe1407a91ce3d7b0982965fb" class="mwe-math-fallback-image-inline mw-invert skin-invert" aria-hidden="true" style="vertical-align: -0.838ex; width:13.408ex; height:2.843ex;" alt="{\displaystyle C(Y-T(Y))}" /></span> represents consumer spending increasing as a function of disposable income (income, <i>Y</i>, minus taxes, <i>T</i>(<i>Y</i>), which themselves depend positively on income), <span class="mwe-math-element"><span class="mwe-math-mathml-inline mwe-math-mathml-a11y" style="display: none;"><math xmlns="http://www.w3.org/1998/Math/MathML" alttext="{\displaystyle I(r)}"> <semantics> <mrow class="MJX-TeXAtom-ORD"> <mstyle displaystyle="true" scriptlevel="0"> <mi>I</mi> <mo stretchy="false">(</mo> <mi>r</mi> <mo stretchy="false">)</mo> </mstyle> </mrow> <annotation encoding="application/x-tex">{\displaystyle I(r)}</annotation> </semantics> </math></span><img src="https://wikimedia.org/api/rest_v1/media/math/render/svg/43eabce3279a8b35ce65904e1bc775fb78e931f5" class="mwe-math-fallback-image-inline mw-invert skin-invert" aria-hidden="true" style="vertical-align: -0.838ex; width:4.03ex; height:2.843ex;" alt="{\displaystyle I(r)}" /></span> represents business investment decreasing as a function of the real interest rate, <i>G</i> represents government spending, and <i>NX</i>(<i>Y</i>) represents net exports (exports minus imports) decreasing as a function of income (decreasing because imports are an increasing function of income). </p> <div class="mw-heading mw-heading3"><h3 id="LM_(liquidity-money)_curve"><span id="LM_.28liquidity-money.29_curve"></span>LM (liquidity-money) curve</h3><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=IS%E2%80%93LM_model&action=edit&section=4" title="Edit section: LM (liquidity-money) curve"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <figure class="skin-invert-image" typeof="mw:File/Thumb"><a href="/wiki/File:Money_Market_diagram.svg" class="mw-file-description"><img src="//upload.wikimedia.org/wikipedia/commons/thumb/d/d2/Money_Market_diagram.svg/270px-Money_Market_diagram.svg.png" decoding="async" width="270" height="270" class="mw-file-element" srcset="//upload.wikimedia.org/wikipedia/commons/thumb/d/d2/Money_Market_diagram.svg/405px-Money_Market_diagram.svg.png 1.5x, //upload.wikimedia.org/wikipedia/commons/thumb/d/d2/Money_Market_diagram.svg/540px-Money_Market_diagram.svg.png 2x" data-file-width="600" data-file-height="600" /></a><figcaption>The money market equilibrium diagram.</figcaption></figure> <p>The LM curve shows the combinations of interest rates and levels of real income for which the money market is in equilibrium. It shows where money demand equals money supply. For the LM curve, the independent variable is income and the dependent variable is the interest rate. </p><p>In the money market equilibrium diagram, the liquidity preference function is the willingness to hold cash. The liquidity preference function is downward sloping (i.e. the willingness to hold cash increases as the interest rate decreases). Two basic elements determine the quantity of cash balances demanded: </p> <ol><li><a href="/wiki/Transactions_demand" title="Transactions demand">Transactions demand</a> for money: this includes both (a) the willingness to hold cash for everyday transactions and (b) a precautionary measure (money demand in case of emergencies). Transactions demand is positively related to real GDP. As GDP is considered exogenous to the liquidity preference function, changes in GDP shift the curve.</li> <li><a href="/wiki/Speculative_demand" class="mw-redirect" title="Speculative demand">Speculative demand</a> for money: this is the willingness to hold cash instead of securities as an asset for investment purposes. Speculative demand is inversely related to the interest rate. As the interest rate rises, the <a href="/wiki/Opportunity_cost" title="Opportunity cost">opportunity cost</a> of holding money rather than investing in securities increases. So, as interest rates rise, speculative demand for money falls.</li></ol> <p>Money supply is determined by central bank decisions and willingness of commercial banks to loan money. Money supply in effect is perfectly <a href="/wiki/Elasticity_(economics)" title="Elasticity (economics)">inelastic</a> with respect to nominal interest rates. Thus the money supply function is represented as a vertical line – money supply is a constant, independent of the interest rate, GDP, and other factors. Mathematically, the LM curve is defined by the equation <span class="mwe-math-element"><span class="mwe-math-mathml-inline mwe-math-mathml-a11y" style="display: none;"><math xmlns="http://www.w3.org/1998/Math/MathML" alttext="{\displaystyle M/P=L(i,Y)}"> <semantics> <mrow class="MJX-TeXAtom-ORD"> <mstyle displaystyle="true" scriptlevel="0"> <mi>M</mi> <mrow class="MJX-TeXAtom-ORD"> <mo>/</mo> </mrow> <mi>P</mi> <mo>=</mo> <mi>L</mi> <mo stretchy="false">(</mo> <mi>i</mi> <mo>,</mo> <mi>Y</mi> <mo stretchy="false">)</mo> </mstyle> </mrow> <annotation encoding="application/x-tex">{\displaystyle M/P=L(i,Y)}</annotation> </semantics> </math></span><img src="https://wikimedia.org/api/rest_v1/media/math/render/svg/aea2fd98859f734e019d04089bb03edfde89369f" class="mwe-math-fallback-image-inline mw-invert skin-invert" aria-hidden="true" style="vertical-align: -0.838ex; width:15.45ex; height:2.843ex;" alt="{\displaystyle M/P=L(i,Y)}" /></span>, where the supply of money is represented as the <a href="/wiki/Real_versus_nominal_value_(economics)" class="mw-redirect" title="Real versus nominal value (economics)">real</a> amount <i>M</i>/<i>P</i> (as opposed to the nominal amount <i>M</i>), with <i>P</i> representing the <a href="/wiki/Price_level" title="Price level">price level</a>, and <i>L</i> being the real demand for money, which is some function of the interest rate and the level of real income. </p><p>An increase in GDP shifts the liquidity preference function rightward and hence increases the interest rate. Thus the LM function is positively sloped. </p> <div class="mw-heading mw-heading2"><h2 id="Shifts">Shifts</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=IS%E2%80%93LM_model&action=edit&section=5" title="Edit section: Shifts"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>One hypothesis is that a government's <a href="/wiki/Deficit_spending" title="Deficit spending">deficit spending</a> ("<a href="/wiki/Fiscal_policy" title="Fiscal policy">fiscal policy</a>") has an effect similar to that of a lower saving rate or increased private fixed investment, increasing the amount of demand for goods at each individual interest rate. An increased deficit by the national government shifts the IS curve to the right. This raises the equilibrium interest rate (from i<sub>1</sub> to i<sub>2</sub>) and national income (from Y<sub>1</sub> to Y<sub>2</sub>), as shown in the graph above. The equilibrium level of national income in the IS–LM diagram is referred to as <a href="/wiki/Aggregate_demand" title="Aggregate demand">aggregate demand</a>. </p><p>Keynesians argue spending may actually "crowd in" (encourage) private fixed investment via the <a href="/wiki/Accelerator_effect" title="Accelerator effect">accelerator effect</a>, which helps long-term growth. Further, if government deficits are spent on productive public investment (e.g., infrastructure or public health) that spending directly and eventually raises potential output, although not necessarily more (or less) than the lost private investment might have. The extent of any crowding out depends on the shape of the LM curve. A shift in the IS curve along a relatively flat LM curve can increase output substantially with little change in the interest rate. On the other hand, a rightward shift in the IS curve along a vertical LM curve will lead to higher interest rates, but no change in output (this case represents the "<a href="/wiki/Treasury_view" title="Treasury view">Treasury view</a>"). </p><p>Rightward shifts of the IS curve also result from <a href="/wiki/Exogeny" title="Exogeny">exogenous</a> increases in investment spending (i.e., for reasons other than interest rates or income), in consumer spending, and in export spending by people outside the economy being modelled, as well as by exogenous decreases in spending on imports. Thus these too raise both equilibrium income and the equilibrium interest rate. Of course, changes in these variables in the opposite direction shift the IS curve in the opposite direction. </p><p>The IS–LM model also allows for the role of <a href="/wiki/Monetary_policy" title="Monetary policy">monetary policy</a>. If the money supply is increased, that shifts the LM curve downward or to the right, lowering interest rates and raising equilibrium national income. Further, exogenous decreases in liquidity preference, perhaps due to improved transactions technologies, lead to downward shifts of the LM curve and thus increases in income and decreases in interest rates. Changes in these variables in the opposite direction shift the LM curve in the opposite direction. </p> <div class="mw-heading mw-heading2"><h2 id="IS–LM_model_with_interest_targeting_central_bank"><span id="IS.E2.80.93LM_model_with_interest_targeting_central_bank"></span>IS–LM model with interest targeting central bank</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=IS%E2%80%93LM_model&action=edit&section=6" title="Edit section: IS–LM model with interest targeting central bank"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>The fact that contemporary central banks normally do not target the money supply, as assumed by the original IS–LM model, but instead conduct their monetary policy by steering the interest rate directly, has led to increasing criticism of the traditional IS–LM setup since 2000 for being outdated and confusing to students. In some textbooks, the traditional LM curve derived from an explicit money market equilibrium story consequently has been replaced by an LM curve simply showing the interest rate level determined by the central bank. Notably this is the case in <a href="/wiki/Olivier_Blanchard" title="Olivier Blanchard">Olivier Blanchard</a>'s widely-used<sup id="cite_ref-Courtoy_13-0" class="reference"><a href="#cite_note-Courtoy-13"><span class="cite-bracket">[</span>13<span class="cite-bracket">]</span></a></sup> intermediate-level textbook "<i>Macroeconomics</i>" since its 7th edition in 2017.<sup id="cite_ref-Davis_14-0" class="reference"><a href="#cite_note-Davis-14"><span class="cite-bracket">[</span>14<span class="cite-bracket">]</span></a></sup> </p><p>In this case, the LM curve becomes horizontal at the interest rate level chosen by the central bank, allowing a simpler kind of dynamics. Also, the interest rate level measured along the vertical axis may be interpreted as either the nominal or the real interest rate, in the latter case allowing inflation to enter the IS–LM model in a simple way. The output level is still determined by the intersection of the IS and LM curves. The LM curve may shift because of a change in monetary policy or possibly a change in inflation expectations, whereas the IS curve as in the traditional model may shift either because of a change in fiscal policy affecting government consumption or taxation, or because of shocks affecting private consumption or investment (or, in the open-economy version, net exports). Additionally, the model distinguishes between the policy interest rate determined by the central bank and the market interest rate which is decisive for firms' investment decisions, and which is equal to the policy interest rate plus a premium which may be interpreted as a risk premium or a measure of the market power or other factors influencing the business strategies of commercial banks. This premium allows for shocks in the financial sector being transmitted to the goods market and consequently affecting aggregate demand.<sup id="cite_ref-blanchard_3-3" class="reference"><a href="#cite_note-blanchard-3"><span class="cite-bracket">[</span>3<span class="cite-bracket">]</span></a></sup><sup class="reference nowrap"><span title="Page / location: 195–201">: 195–201 </span></sup> </p><p>Similar models, though called slightly different names, appear in the textbooks by <a href="/wiki/Charles_I._Jones" title="Charles I. Jones">Charles Jones</a><sup id="cite_ref-araujo_15-0" class="reference"><a href="#cite_note-araujo-15"><span class="cite-bracket">[</span>15<span class="cite-bracket">]</span></a></sup> and by <a href="/wiki/Wendy_Carlin" title="Wendy Carlin">Wendy Carlin</a> and <a href="/wiki/David_Soskice" title="David Soskice">David Soskice</a><sup id="cite_ref-Davis_14-1" class="reference"><a href="#cite_note-Davis-14"><span class="cite-bracket">[</span>14<span class="cite-bracket">]</span></a></sup> and the <a href="/wiki/CORE_Econ" title="CORE Econ">CORE Econ</a> project.<sup id="cite_ref-Davis_14-2" class="reference"><a href="#cite_note-Davis-14"><span class="cite-bracket">[</span>14<span class="cite-bracket">]</span></a></sup> Parallelly, texts by Akira Weerapana and <a href="/w/index.php?title=Stephen_Williamson_(economist)&action=edit&redlink=1" class="new" title="Stephen Williamson (economist) (page does not exist)">Stephen Williamson</a> have outlined approaches where the LM curve is replaced with a real interest rate rule.<sup id="cite_ref-araujo_15-1" class="reference"><a href="#cite_note-araujo-15"><span class="cite-bracket">[</span>15<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-16" class="reference"><a href="#cite_note-16"><span class="cite-bracket">[</span>16<span class="cite-bracket">]</span></a></sup> </p> <div class="mw-heading mw-heading2"><h2 id="Incorporation_into_larger_models">Incorporation into larger models</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=IS%E2%80%93LM_model&action=edit&section=7" title="Edit section: Incorporation into larger models"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>By itself, the traditional IS–LM model is used to study the short run when <a href="/wiki/Price_level" title="Price level">prices</a> are fixed or sticky, and no <a href="/wiki/Inflation" title="Inflation">inflation</a> is taken into consideration. In addition, the model is often used as a sub-model of larger models which allow for a flexible <a href="/wiki/Price_level" title="Price level">price level</a>. The addition of a supply relation enables the model to be used for both short- and medium-run analysis of the economy, or to use a different terminology: classical and Keynesian analysis.<sup id="cite_ref-araujo_15-2" class="reference"><a href="#cite_note-araujo-15"><span class="cite-bracket">[</span>15<span class="cite-bracket">]</span></a></sup> </p><p>A main example of this is the Aggregate Demand-Aggregate Supply model – the <a href="/wiki/AD%E2%80%93AS_model" title="AD–AS model">AD–AS model</a>.<sup id="cite_ref-araujo_15-3" class="reference"><a href="#cite_note-araujo-15"><span class="cite-bracket">[</span>15<span class="cite-bracket">]</span></a></sup> In the aggregate demand-aggregate supply model, each point on the aggregate demand curve is an outcome of the IS–LM model for aggregate demand Y based on a particular price level. Starting from one point on the aggregate demand curve, at a particular price level and a quantity of aggregate demand implied by the IS–LM model for that price level, if one considers a higher potential price level, in the IS–LM model the real money supply M/P will be lower and hence the LM curve will be shifted higher, leading to lower aggregate demand as measured by the horizontal location of the IS–LM intersection; hence at the higher price level the level of aggregate demand is lower, so the aggregate demand curve is negatively sloped.<sup id="cite_ref-mankiw_17-0" class="reference"><a href="#cite_note-mankiw-17"><span class="cite-bracket">[</span>17<span class="cite-bracket">]</span></a></sup><sup class="reference nowrap"><span title="Page / location: 315–317">: 315–317 </span></sup> </p><p>In the 2018 textbook "Macroeconomics" by <a href="/wiki/Daron_Acemoglu" title="Daron Acemoglu">Daron Acemoglu</a>, <a href="/wiki/David_Laibson" title="David Laibson">David Laibson</a> and <a href="/wiki/John_A._List" title="John A. List">John A. List</a>, the corresponding model combining a traditional IS-LM setup with a relation for a changing price level is named an IS-LM-FE model (FE standing for "full equilibrium").<sup id="cite_ref-acemoglu_etal_2018_18-0" class="reference"><a href="#cite_note-acemoglu_etal_2018-18"><span class="cite-bracket">[</span>18<span class="cite-bracket">]</span></a></sup> </p> <div class="mw-heading mw-heading3"><h3 id="AD-AS-like_models_with_inflation_instead_of_price_levels">AD-AS-like models with inflation instead of price levels</h3><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=IS%E2%80%93LM_model&action=edit&section=8" title="Edit section: AD-AS-like models with inflation instead of price levels"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>In many modern textbooks, the traditional AD–AS diagram is replaced by a variation in which the variables are not output and the price level, but instead output and inflation (i.e., the change in the price level). In this case, the relation corresponding to the AS curve is normally derived from a <a href="/wiki/Phillips_curve" title="Phillips curve">Phillips curve</a> relationship between inflation and the unemployment gap. As policymakers and economists are generally concerned about inflation levels and not actual price levels, this formulation is considered more appropriate. This variation is often referred to as a dynamic AD–AS model,<sup id="cite_ref-SWJ_9-1" class="reference"><a href="#cite_note-SWJ-9"><span class="cite-bracket">[</span>9<span class="cite-bracket">]</span></a></sup><sup id="cite_ref-mankiw_17-1" class="reference"><a href="#cite_note-mankiw-17"><span class="cite-bracket">[</span>17<span class="cite-bracket">]</span></a></sup> but may also have other names. Olivier Blanchard in his textbook uses the term IS–LM–PC model (PC standing for Phillips curve).<sup id="cite_ref-blanchard_3-4" class="reference"><a href="#cite_note-blanchard-3"><span class="cite-bracket">[</span>3<span class="cite-bracket">]</span></a></sup> Others, among them Carlin and Soskice, refer to it as the "three-equation New Keynesian model",<sup id="cite_ref-Davis_14-3" class="reference"><a href="#cite_note-Davis-14"><span class="cite-bracket">[</span>14<span class="cite-bracket">]</span></a></sup> the three equations being an IS relation, often augmented with a term that allows for expectations influencing demand, a monetary policy (interest) rule and a short-run Phillips curve.<sup id="cite_ref-araujo_15-4" class="reference"><a href="#cite_note-araujo-15"><span class="cite-bracket">[</span>15<span class="cite-bracket">]</span></a></sup> </p> <div class="mw-heading mw-heading2"><h2 id="Variations">Variations</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=IS%E2%80%93LM_model&action=edit&section=9" title="Edit section: Variations"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <div class="mw-heading mw-heading3"><h3 id="IS-LM-NAC_model">IS-LM-NAC model</h3><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=IS%E2%80%93LM_model&action=edit&section=10" title="Edit section: IS-LM-NAC model"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <p>In 2016, <a href="/wiki/Roger_Farmer" title="Roger Farmer">Roger Farmer</a> and Konstantin Platonov presented a so-called IS-LM-NAC model (NAC standing for "<a href="/wiki/No_arbitrage_condition" class="mw-redirect" title="No arbitrage condition">no arbitrage condition</a>", in casu between physical capital and financial assets), in which the long-run effect of monetary policy depends on the way in which people form beliefs. The model was an attempt to integrate the phenomenon of <a href="/wiki/Secular_stagnation" title="Secular stagnation">secular stagnation</a> in the IS-LM model. Whereas in the IS-LM model, high unemployment would be a temporary phenomenon caused by sticky wages and prices, in the IS-LM-NAC model high unemployment may be a permanent situation caused by pessimistic beliefs - a particular instance of what Keynes called <a href="/wiki/Animal_spirits_(Keynes)" title="Animal spirits (Keynes)">animal spirits</a>.<sup id="cite_ref-19" class="reference"><a href="#cite_note-19"><span class="cite-bracket">[</span>19<span class="cite-bracket">]</span></a></sup> The model was part of a broader research agenda studying how beliefs may independently influence macroeconomic outcomes.<sup id="cite_ref-20" class="reference"><a href="#cite_note-20"><span class="cite-bracket">[</span>20<span class="cite-bracket">]</span></a></sup> </p> <div class="mw-heading mw-heading2"><h2 id="See_also">See also</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=IS%E2%80%93LM_model&action=edit&section=11" title="Edit section: See also"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <style data-mw-deduplicate="TemplateStyles:r1184024115">.mw-parser-output .div-col{margin-top:0.3em;column-width:30em}.mw-parser-output .div-col-small{font-size:90%}.mw-parser-output .div-col-rules{column-rule:1px solid #aaa}.mw-parser-output .div-col dl,.mw-parser-output .div-col ol,.mw-parser-output .div-col ul{margin-top:0}.mw-parser-output .div-col li,.mw-parser-output .div-col dd{page-break-inside:avoid;break-inside:avoid-column}</style><div class="div-col"> <ul><li><a href="/wiki/Keynesian_cross" title="Keynesian cross">Keynesian cross</a></li> <li><a href="/wiki/AD%E2%80%93IA_model" title="AD–IA model">AD–IA model</a></li> <li><a href="/wiki/Mundell%E2%80%93Fleming_model" title="Mundell–Fleming model">Mundell–Fleming model</a></li> <li><a href="/wiki/National_savings" class="mw-redirect" title="National savings">National savings</a></li> <li><a href="/wiki/Policy_mix" title="Policy mix">Policy mix</a></li></ul> </div> <div class="mw-heading mw-heading2"><h2 id="References">References</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=IS%E2%80%93LM_model&action=edit&section=12" title="Edit section: References"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <style data-mw-deduplicate="TemplateStyles:r1239543626">.mw-parser-output .reflist{margin-bottom:0.5em;list-style-type:decimal}@media screen{.mw-parser-output .reflist{font-size:90%}}.mw-parser-output .reflist .references{font-size:100%;margin-bottom:0;list-style-type:inherit}.mw-parser-output .reflist-columns-2{column-width:30em}.mw-parser-output .reflist-columns-3{column-width:25em}.mw-parser-output .reflist-columns{margin-top:0.3em}.mw-parser-output .reflist-columns ol{margin-top:0}.mw-parser-output .reflist-columns li{page-break-inside:avoid;break-inside:avoid-column}.mw-parser-output .reflist-upper-alpha{list-style-type:upper-alpha}.mw-parser-output .reflist-upper-roman{list-style-type:upper-roman}.mw-parser-output .reflist-lower-alpha{list-style-type:lower-alpha}.mw-parser-output .reflist-lower-greek{list-style-type:lower-greek}.mw-parser-output .reflist-lower-roman{list-style-type:lower-roman}</style><div class="reflist"> <div class="mw-references-wrap mw-references-columns"><ol class="references"> <li id="cite_note-Hicks1937-1"><span class="mw-cite-backlink">^ <a href="#cite_ref-Hicks1937_1-0"><sup><i><b>a</b></i></sup></a> <a href="#cite_ref-Hicks1937_1-1"><sup><i><b>b</b></i></sup></a></span> <span class="reference-text"><style data-mw-deduplicate="TemplateStyles:r1238218222">.mw-parser-output cite.citation{font-style:inherit;word-wrap:break-word}.mw-parser-output .citation q{quotes:"\"""\"""'""'"}.mw-parser-output .citation:target{background-color:rgba(0,127,255,0.133)}.mw-parser-output .id-lock-free.id-lock-free a{background:url("//upload.wikimedia.org/wikipedia/commons/6/65/Lock-green.svg")right 0.1em center/9px no-repeat}.mw-parser-output .id-lock-limited.id-lock-limited a,.mw-parser-output .id-lock-registration.id-lock-registration a{background:url("//upload.wikimedia.org/wikipedia/commons/d/d6/Lock-gray-alt-2.svg")right 0.1em center/9px no-repeat}.mw-parser-output .id-lock-subscription.id-lock-subscription a{background:url("//upload.wikimedia.org/wikipedia/commons/a/aa/Lock-red-alt-2.svg")right 0.1em center/9px no-repeat}.mw-parser-output .cs1-ws-icon a{background:url("//upload.wikimedia.org/wikipedia/commons/4/4c/Wikisource-logo.svg")right 0.1em center/12px no-repeat}body:not(.skin-timeless):not(.skin-minerva) .mw-parser-output .id-lock-free a,body:not(.skin-timeless):not(.skin-minerva) .mw-parser-output .id-lock-limited a,body:not(.skin-timeless):not(.skin-minerva) .mw-parser-output .id-lock-registration a,body:not(.skin-timeless):not(.skin-minerva) .mw-parser-output .id-lock-subscription a,body:not(.skin-timeless):not(.skin-minerva) .mw-parser-output .cs1-ws-icon a{background-size:contain;padding:0 1em 0 0}.mw-parser-output .cs1-code{color:inherit;background:inherit;border:none;padding:inherit}.mw-parser-output .cs1-hidden-error{display:none;color:var(--color-error,#d33)}.mw-parser-output .cs1-visible-error{color:var(--color-error,#d33)}.mw-parser-output .cs1-maint{display:none;color:#085;margin-left:0.3em}.mw-parser-output .cs1-kern-left{padding-left:0.2em}.mw-parser-output .cs1-kern-right{padding-right:0.2em}.mw-parser-output .citation .mw-selflink{font-weight:inherit}@media screen{.mw-parser-output .cs1-format{font-size:95%}html.skin-theme-clientpref-night .mw-parser-output .cs1-maint{color:#18911f}}@media screen and (prefers-color-scheme:dark){html.skin-theme-clientpref-os .mw-parser-output .cs1-maint{color:#18911f}}</style><cite id="CITEREFHicks1937" class="citation journal cs1">Hicks, J. R. (1937). "Mr. Keynes and the 'Classics': A Suggested Interpretation". <i><a href="/wiki/Econometrica" title="Econometrica">Econometrica</a></i>. <b>5</b> (2): <span class="nowrap">147–</span>159. <a href="/wiki/Doi_(identifier)" class="mw-redirect" title="Doi (identifier)">doi</a>:<a rel="nofollow" class="external text" href="https://doi.org/10.2307%2F1907242">10.2307/1907242</a>. <a href="/wiki/JSTOR_(identifier)" class="mw-redirect" title="JSTOR (identifier)">JSTOR</a> <a rel="nofollow" class="external text" href="https://www.jstor.org/stable/1907242">1907242</a>.</cite><span title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Ajournal&rft.genre=article&rft.jtitle=Econometrica&rft.atitle=Mr.+Keynes+and+the+%27Classics%27%3A+A+Suggested+Interpretation&rft.volume=5&rft.issue=2&rft.pages=%3Cspan+class%3D%22nowrap%22%3E147-%3C%2Fspan%3E159&rft.date=1937&rft_id=info%3Adoi%2F10.2307%2F1907242&rft_id=https%3A%2F%2Fwww.jstor.org%2Fstable%2F1907242%23id-name%3DJSTOR&rft.aulast=Hicks&rft.aufirst=J.+R.&rfr_id=info%3Asid%2Fen.wikipedia.org%3AIS%E2%80%93LM+model" class="Z3988"></span></span> </li> <li id="cite_note-2"><span class="mw-cite-backlink"><b><a href="#cite_ref-2">^</a></b></span> <span class="reference-text"><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1238218222" /><cite id="CITEREFMeade1937" class="citation journal cs1">Meade, J. E. (1937). "A Simplified Model of Mr. Keynes' System". <i><a href="/wiki/Review_of_Economic_Studies" class="mw-redirect" title="Review of Economic Studies">Review of Economic Studies</a></i>. <b>4</b> (2): <span class="nowrap">98–</span>107. <a href="/wiki/Doi_(identifier)" class="mw-redirect" title="Doi (identifier)">doi</a>:<a rel="nofollow" class="external text" href="https://doi.org/10.2307%2F2967607">10.2307/2967607</a>. <a href="/wiki/JSTOR_(identifier)" class="mw-redirect" title="JSTOR (identifier)">JSTOR</a> <a rel="nofollow" class="external text" href="https://www.jstor.org/stable/2967607">2967607</a>.</cite><span title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Ajournal&rft.genre=article&rft.jtitle=Review+of+Economic+Studies&rft.atitle=A+Simplified+Model+of+Mr.+Keynes%27+System&rft.volume=4&rft.issue=2&rft.pages=%3Cspan+class%3D%22nowrap%22%3E98-%3C%2Fspan%3E107&rft.date=1937&rft_id=info%3Adoi%2F10.2307%2F2967607&rft_id=https%3A%2F%2Fwww.jstor.org%2Fstable%2F2967607%23id-name%3DJSTOR&rft.aulast=Meade&rft.aufirst=J.+E.&rfr_id=info%3Asid%2Fen.wikipedia.org%3AIS%E2%80%93LM+model" class="Z3988"></span></span> </li> <li id="cite_note-blanchard-3"><span class="mw-cite-backlink">^ <a href="#cite_ref-blanchard_3-0"><sup><i><b>a</b></i></sup></a> <a href="#cite_ref-blanchard_3-1"><sup><i><b>b</b></i></sup></a> <a href="#cite_ref-blanchard_3-2"><sup><i><b>c</b></i></sup></a> <a href="#cite_ref-blanchard_3-3"><sup><i><b>d</b></i></sup></a> <a href="#cite_ref-blanchard_3-4"><sup><i><b>e</b></i></sup></a></span> <span class="reference-text"><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1238218222" /><cite id="CITEREFBlanchard2021" class="citation book cs1">Blanchard, Olivier (2021). <i>Macroeconomics</i> (Eighth, global ed.). Harlow, England: Pearson. <a href="/wiki/ISBN_(identifier)" class="mw-redirect" title="ISBN (identifier)">ISBN</a> <a href="/wiki/Special:BookSources/978-0-134-89789-9" title="Special:BookSources/978-0-134-89789-9"><bdi>978-0-134-89789-9</bdi></a>.</cite><span title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Abook&rft.genre=book&rft.btitle=Macroeconomics&rft.place=Harlow%2C+England&rft.edition=Eighth%2C+global&rft.pub=Pearson&rft.date=2021&rft.isbn=978-0-134-89789-9&rft.aulast=Blanchard&rft.aufirst=Olivier&rfr_id=info%3Asid%2Fen.wikipedia.org%3AIS%E2%80%93LM+model" class="Z3988"></span></span> </li> <li id="cite_note-4"><span class="mw-cite-backlink"><b><a href="#cite_ref-4">^</a></b></span> <span class="reference-text"><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1238218222" /><cite id="CITEREFHansen1953" class="citation book cs1">Hansen, A. H. (1953). <span class="id-lock-registration" title="Free registration required"><a rel="nofollow" class="external text" href="https://archive.org/details/guidetokeynes0000hans"><i>A Guide to Keynes</i></a></span>. New York: McGraw Hill. <a href="/wiki/ISBN_(identifier)" class="mw-redirect" title="ISBN (identifier)">ISBN</a> <a href="/wiki/Special:BookSources/9780070260467" title="Special:BookSources/9780070260467"><bdi>9780070260467</bdi></a>.</cite><span title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Abook&rft.genre=book&rft.btitle=A+Guide+to+Keynes&rft.place=New+York&rft.pub=McGraw+Hill&rft.date=1953&rft.isbn=9780070260467&rft.aulast=Hansen&rft.aufirst=A.+H.&rft_id=https%3A%2F%2Farchive.org%2Fdetails%2Fguidetokeynes0000hans&rfr_id=info%3Asid%2Fen.wikipedia.org%3AIS%E2%80%93LM+model" class="Z3988"></span></span> </li> <li id="cite_note-5"><span class="mw-cite-backlink"><b><a href="#cite_ref-5">^</a></b></span> <span class="reference-text"><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1238218222" /><cite id="CITEREFBentolila2005" class="citation book cs1">Bentolila, Samuel (2005). "Hicks–Hansen model". <i>An Eponymous Dictionary of Economics: A Guide to Laws and Theorems Named after Economists</i>. Edward Elgar. <a href="/wiki/ISBN_(identifier)" class="mw-redirect" title="ISBN (identifier)">ISBN</a> <a href="/wiki/Special:BookSources/978-1-84376-029-0" title="Special:BookSources/978-1-84376-029-0"><bdi>978-1-84376-029-0</bdi></a>.</cite><span title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Abook&rft.genre=bookitem&rft.atitle=Hicks%E2%80%93Hansen+model&rft.btitle=An+Eponymous+Dictionary+of+Economics%3A+A+Guide+to+Laws+and+Theorems+Named+after+Economists&rft.pub=Edward+Elgar&rft.date=2005&rft.isbn=978-1-84376-029-0&rft.aulast=Bentolila&rft.aufirst=Samuel&rfr_id=info%3Asid%2Fen.wikipedia.org%3AIS%E2%80%93LM+model" class="Z3988"></span></span> </li> <li id="cite_note-Romer-6"><span class="mw-cite-backlink">^ <a href="#cite_ref-Romer_6-0"><sup><i><b>a</b></i></sup></a> <a href="#cite_ref-Romer_6-1"><sup><i><b>b</b></i></sup></a> <a href="#cite_ref-Romer_6-2"><sup><i><b>c</b></i></sup></a> <a href="#cite_ref-Romer_6-3"><sup><i><b>d</b></i></sup></a> <a href="#cite_ref-Romer_6-4"><sup><i><b>e</b></i></sup></a></span> <span class="reference-text"><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1238218222" /><cite id="CITEREFRomer2000" class="citation journal cs1">Romer, David (1 May 2000). <a rel="nofollow" class="external text" href="https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.14.2.149">"Keynesian Macroeconomics without the LM Curve"</a>. <i>Journal of Economic Perspectives</i>. <b>14</b> (2): <span class="nowrap">149–</span>170. <a href="/wiki/Doi_(identifier)" class="mw-redirect" title="Doi (identifier)">doi</a>:<a rel="nofollow" class="external text" href="https://doi.org/10.1257%2Fjep.14.2.149">10.1257/jep.14.2.149</a>. <a href="/wiki/ISSN_(identifier)" class="mw-redirect" title="ISSN (identifier)">ISSN</a> <a rel="nofollow" class="external text" href="https://search.worldcat.org/issn/0895-3309">0895-3309</a><span class="reference-accessdate">. Retrieved <span class="nowrap">9 November</span> 2023</span>.</cite><span title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Ajournal&rft.genre=article&rft.jtitle=Journal+of+Economic+Perspectives&rft.atitle=Keynesian+Macroeconomics+without+the+LM+Curve&rft.volume=14&rft.issue=2&rft.pages=%3Cspan+class%3D%22nowrap%22%3E149-%3C%2Fspan%3E170&rft.date=2000-05-01&rft_id=info%3Adoi%2F10.1257%2Fjep.14.2.149&rft.issn=0895-3309&rft.aulast=Romer&rft.aufirst=David&rft_id=https%3A%2F%2Fpubs.aeaweb.org%2Fdoi%2Fpdfplus%2F10.1257%2Fjep.14.2.149&rfr_id=info%3Asid%2Fen.wikipedia.org%3AIS%E2%80%93LM+model" class="Z3988"></span></span> </li> <li id="cite_note-7"><span class="mw-cite-backlink"><b><a href="#cite_ref-7">^</a></b></span> <span class="reference-text"><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1238218222" /><cite id="CITEREFTaylor2000" class="citation journal cs1">Taylor, John B. (May 2000). <a rel="nofollow" class="external text" href="https://www.aeaweb.org/articles?id=10.1257/aer.90.2.90">"Teaching Modern Macroeconomics at the Principles Level"</a>. <i>American Economic Review</i>. <b>90</b> (2): <span class="nowrap">90–</span>94. <a href="/wiki/Doi_(identifier)" class="mw-redirect" title="Doi (identifier)">doi</a>:<a rel="nofollow" class="external text" href="https://doi.org/10.1257%2Faer.90.2.90">10.1257/aer.90.2.90</a>. <a href="/wiki/ISSN_(identifier)" class="mw-redirect" title="ISSN (identifier)">ISSN</a> <a rel="nofollow" class="external text" href="https://search.worldcat.org/issn/0002-8282">0002-8282</a><span class="reference-accessdate">. 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A.</a> (2016-09-02). <a rel="nofollow" class="external text" href="https://voxeu.org/article/reinventing-lm-explain-secular-stagnation">"Reinventing IS-LM: The IS-LM-NAC model and how to use it"</a>. <i>Vox EU</i><span class="reference-accessdate">. Retrieved <span class="nowrap">2020-10-01</span></span>.</cite><span title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Ajournal&rft.genre=article&rft.jtitle=Vox+EU&rft.atitle=Reinventing+IS-LM%3A+The+IS-LM-NAC+model+and+how+to+use+it&rft.date=2016-09-02&rft.aulast=Farmer&rft.aufirst=Roger+E.+A.&rft_id=https%3A%2F%2Fvoxeu.org%2Farticle%2Freinventing-lm-explain-secular-stagnation&rfr_id=info%3Asid%2Fen.wikipedia.org%3AIS%E2%80%93LM+model" class="Z3988"></span></span> </li> <li id="cite_note-20"><span class="mw-cite-backlink"><b><a href="#cite_ref-20">^</a></b></span> <span class="reference-text"><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1238218222" /><cite id="CITEREFFarmerPlatonov2019" class="citation journal cs1"><a href="/wiki/Roger_Farmer" title="Roger Farmer">Farmer, Roger E. A.</a>; Platonov, Konstantin (2019). <a rel="nofollow" class="external text" href="http://www.nber.org/papers/w22136.pdf">"Animal spirits in a monetary model"</a> <span class="cs1-format">(PDF)</span>. <i><a href="/wiki/European_Economic_Review" title="European Economic Review">European Economic Review</a></i>. <b>115</b>: <span class="nowrap">60–</span>77. <a href="/wiki/Doi_(identifier)" class="mw-redirect" title="Doi (identifier)">doi</a>:<a rel="nofollow" class="external text" href="https://doi.org/10.1016%2Fj.euroecorev.2019.02.005">10.1016/j.euroecorev.2019.02.005</a>. <a href="/wiki/S2CID_(identifier)" class="mw-redirect" title="S2CID (identifier)">S2CID</a> <a rel="nofollow" class="external text" href="https://api.semanticscholar.org/CorpusID:55928575">55928575</a>.</cite><span title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Ajournal&rft.genre=article&rft.jtitle=European+Economic+Review&rft.atitle=Animal+spirits+in+a+monetary+model&rft.volume=115&rft.pages=%3Cspan+class%3D%22nowrap%22%3E60-%3C%2Fspan%3E77&rft.date=2019&rft_id=info%3Adoi%2F10.1016%2Fj.euroecorev.2019.02.005&rft_id=https%3A%2F%2Fapi.semanticscholar.org%2FCorpusID%3A55928575%23id-name%3DS2CID&rft.aulast=Farmer&rft.aufirst=Roger+E.+A.&rft.au=Platonov%2C+Konstantin&rft_id=http%3A%2F%2Fwww.nber.org%2Fpapers%2Fw22136.pdf&rfr_id=info%3Asid%2Fen.wikipedia.org%3AIS%E2%80%93LM+model" class="Z3988"></span></span> </li> </ol></div></div> <div class="mw-heading mw-heading2"><h2 id="Further_reading">Further reading</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=IS%E2%80%93LM_model&action=edit&section=13" title="Edit section: Further reading"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <ul><li><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1238218222" /><cite id="CITEREFBarro1984" class="citation book cs1"><a href="/wiki/Robert_Barro" title="Robert Barro">Barro, Robert J.</a> (1984). <a rel="nofollow" class="external text" href="https://archive.org/details/macroeconomics00barr/page/487">"The Keynesian Theory of Business Fluctuations"</a>. <i>Macroeconomics</i>. New York: John Wiley. pp. <a rel="nofollow" class="external text" href="https://archive.org/details/macroeconomics00barr/page/487">487–513</a>. <a href="/wiki/ISBN_(identifier)" class="mw-redirect" title="ISBN (identifier)">ISBN</a> <a href="/wiki/Special:BookSources/978-0-471-87407-2" title="Special:BookSources/978-0-471-87407-2"><bdi>978-0-471-87407-2</bdi></a>.</cite><span title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Abook&rft.genre=bookitem&rft.atitle=The+Keynesian+Theory+of+Business+Fluctuations&rft.btitle=Macroeconomics&rft.place=New+York&rft.pages=487-513&rft.pub=John+Wiley&rft.date=1984&rft.isbn=978-0-471-87407-2&rft.aulast=Barro&rft.aufirst=Robert+J.&rft_id=https%3A%2F%2Farchive.org%2Fdetails%2Fmacroeconomics00barr%2Fpage%2F487&rfr_id=info%3Asid%2Fen.wikipedia.org%3AIS%E2%80%93LM+model" class="Z3988"></span></li> <li><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1238218222" /><cite id="CITEREFBlanchard2021" class="citation book cs1"><a href="/wiki/Olivier_Blanchard" title="Olivier Blanchard">Blanchard, Olivier</a> (2021). "Goods and Financial Markets: The IS-LM Model". <i>Macroeconomics</i> (Eighth, global ed.). Harlow, England: Pearson. pp. <span class="nowrap">107–</span>126. <a href="/wiki/ISBN_(identifier)" class="mw-redirect" title="ISBN (identifier)">ISBN</a> <a href="/wiki/Special:BookSources/978-0-134-89789-9" title="Special:BookSources/978-0-134-89789-9"><bdi>978-0-134-89789-9</bdi></a>.</cite><span title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Abook&rft.genre=bookitem&rft.atitle=Goods+and+Financial+Markets%3A+The+IS-LM+Model&rft.btitle=Macroeconomics&rft.place=Harlow%2C+England&rft.pages=%3Cspan+class%3D%22nowrap%22%3E107-%3C%2Fspan%3E126&rft.edition=Eighth%2C+global&rft.pub=Pearson&rft.date=2021&rft.isbn=978-0-134-89789-9&rft.aulast=Blanchard&rft.aufirst=Olivier&rfr_id=info%3Asid%2Fen.wikipedia.org%3AIS%E2%80%93LM+model" class="Z3988"></span></li> <li><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1238218222" /><cite id="CITEREFHicks1937" class="citation journal cs1"><a href="/wiki/John_Hicks" title="John Hicks">Hicks, J. R.</a> (1937). "Mr. Keynes and the 'Classics': A Suggested Interpretation". <i><a href="/wiki/Econometrica" title="Econometrica">Econometrica</a></i>. <b>5</b> (2): <span class="nowrap">147–</span>159. <a href="/wiki/Doi_(identifier)" class="mw-redirect" title="Doi (identifier)">doi</a>:<a rel="nofollow" class="external text" href="https://doi.org/10.2307%2F1907242">10.2307/1907242</a>. <a href="/wiki/JSTOR_(identifier)" class="mw-redirect" title="JSTOR (identifier)">JSTOR</a> <a rel="nofollow" class="external text" href="https://www.jstor.org/stable/1907242">1907242</a>.</cite><span title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Ajournal&rft.genre=article&rft.jtitle=Econometrica&rft.atitle=Mr.+Keynes+and+the+%27Classics%27%3A+A+Suggested+Interpretation&rft.volume=5&rft.issue=2&rft.pages=%3Cspan+class%3D%22nowrap%22%3E147-%3C%2Fspan%3E159&rft.date=1937&rft_id=info%3Adoi%2F10.2307%2F1907242&rft_id=https%3A%2F%2Fwww.jstor.org%2Fstable%2F1907242%23id-name%3DJSTOR&rft.aulast=Hicks&rft.aufirst=J.+R.&rfr_id=info%3Asid%2Fen.wikipedia.org%3AIS%E2%80%93LM+model" class="Z3988"></span></li> <li><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1238218222" /><cite id="CITEREFKrugman2011" class="citation news cs1"><a href="/wiki/Paul_Krugman" title="Paul Krugman">Krugman, Paul</a> (2011-10-09). <a rel="nofollow" class="external text" href="https://krugman.blogs.nytimes.com/2011/10/09/is-lmentary/">"IS-LMentary"</a>. <i>The New York Times</i><span class="reference-accessdate">. Retrieved <span class="nowrap">2020-10-01</span></span>.</cite><span title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Ajournal&rft.genre=article&rft.jtitle=The+New+York+Times&rft.atitle=IS-LMentary&rft.date=2011-10-09&rft.aulast=Krugman&rft.aufirst=Paul&rft_id=https%3A%2F%2Fkrugman.blogs.nytimes.com%2F2011%2F10%2F09%2Fis-lmentary%2F&rfr_id=info%3Asid%2Fen.wikipedia.org%3AIS%E2%80%93LM+model" class="Z3988"></span></li> <li><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1238218222" /><cite id="CITEREFLeijonhufvud1983" class="citation book cs1"><a href="/wiki/Axel_Leijonhufvud" title="Axel Leijonhufvud">Leijonhufvud, Axel</a> (1983). <a rel="nofollow" class="external text" href="https://archive.org/details/modernmacroecono0000unse/page/49">"What is Wrong with IS/LM?"</a>. In <a href="/wiki/Jean-Paul_Fitoussi" title="Jean-Paul Fitoussi">Fitoussi, Jean-Paul</a> (ed.). <i>Modern Macroeconomic Theory</i>. Oxford: Blackwell. pp. <a rel="nofollow" class="external text" href="https://archive.org/details/modernmacroecono0000unse/page/49">49–90</a>. <a href="/wiki/ISBN_(identifier)" class="mw-redirect" title="ISBN (identifier)">ISBN</a> <a href="/wiki/Special:BookSources/978-0-631-13158-8" title="Special:BookSources/978-0-631-13158-8"><bdi>978-0-631-13158-8</bdi></a>.</cite><span title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Abook&rft.genre=bookitem&rft.atitle=What+is+Wrong+with+IS%2FLM%3F&rft.btitle=Modern+Macroeconomic+Theory&rft.place=Oxford&rft.pages=49-90&rft.pub=Blackwell&rft.date=1983&rft.isbn=978-0-631-13158-8&rft.aulast=Leijonhufvud&rft.aufirst=Axel&rft_id=https%3A%2F%2Farchive.org%2Fdetails%2Fmodernmacroecono0000unse%2Fpage%2F49&rfr_id=info%3Asid%2Fen.wikipedia.org%3AIS%E2%80%93LM+model" class="Z3988"></span></li> <li><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1238218222" /><cite id="CITEREFMankiw2022" class="citation book cs1"><a href="/wiki/Greg_Mankiw" title="Greg Mankiw">Mankiw, Nicholas Gregory</a> (2022). "Aggregate Demand I+II". <i>Macroeconomics</i> (Eleventh, international ed.). New York, NY: Worth Publishers, Macmillan Learning. pp. <span class="nowrap">283–</span>334. <a href="/wiki/ISBN_(identifier)" class="mw-redirect" title="ISBN (identifier)">ISBN</a> <a href="/wiki/Special:BookSources/978-1-319-26390-4" title="Special:BookSources/978-1-319-26390-4"><bdi>978-1-319-26390-4</bdi></a>.</cite><span title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Abook&rft.genre=bookitem&rft.atitle=Aggregate+Demand+I%2BII&rft.btitle=Macroeconomics&rft.place=New+York%2C+NY&rft.pages=%3Cspan+class%3D%22nowrap%22%3E283-%3C%2Fspan%3E334&rft.edition=Eleventh%2C+international&rft.pub=Worth+Publishers%2C+Macmillan+Learning&rft.date=2022&rft.isbn=978-1-319-26390-4&rft.aulast=Mankiw&rft.aufirst=Nicholas+Gregory&rfr_id=info%3Asid%2Fen.wikipedia.org%3AIS%E2%80%93LM+model" class="Z3988"></span></li> <li><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1238218222" /><cite id="CITEREFRomer2000" class="citation journal cs1"><a href="/wiki/David_Romer" title="David Romer">Romer, David</a> (2000). <a rel="nofollow" class="external text" href="https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.14.2.149">"Keynesian Macroeconomics without the LM Curve"</a>. <i>Journal of Economic Perspectives</i>. <b>14</b> (2): <span class="nowrap">149–</span>170. <a href="/wiki/Doi_(identifier)" class="mw-redirect" title="Doi (identifier)">doi</a>:<a rel="nofollow" class="external text" href="https://doi.org/10.1257%2Fjep.14.2.149">10.1257/jep.14.2.149</a>. <a href="/wiki/ISSN_(identifier)" class="mw-redirect" title="ISSN (identifier)">ISSN</a> <a rel="nofollow" class="external text" href="https://search.worldcat.org/issn/0895-3309">0895-3309</a>.</cite><span title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Ajournal&rft.genre=article&rft.jtitle=Journal+of+Economic+Perspectives&rft.atitle=Keynesian+Macroeconomics+without+the+LM+Curve&rft.volume=14&rft.issue=2&rft.pages=%3Cspan+class%3D%22nowrap%22%3E149-%3C%2Fspan%3E170&rft.date=2000&rft_id=info%3Adoi%2F10.1257%2Fjep.14.2.149&rft.issn=0895-3309&rft.aulast=Romer&rft.aufirst=David&rft_id=https%3A%2F%2Fpubs.aeaweb.org%2Fdoi%2Fpdfplus%2F10.1257%2Fjep.14.2.149&rfr_id=info%3Asid%2Fen.wikipedia.org%3AIS%E2%80%93LM+model" class="Z3988"></span></li> <li><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1238218222" /><cite id="CITEREFSmith1956" class="citation journal cs1">Smith, Warren L. (1956). "A Graphical Exposition of the Complete Keynesian System". <i><a href="/wiki/Southern_Economic_Journal" class="mw-redirect" title="Southern Economic Journal">Southern Economic Journal</a></i>. <b>23</b> (2): <span class="nowrap">115–</span>125. <a href="/wiki/Doi_(identifier)" class="mw-redirect" title="Doi (identifier)">doi</a>:<a rel="nofollow" class="external text" href="https://doi.org/10.2307%2F1053551">10.2307/1053551</a>. <a href="/wiki/JSTOR_(identifier)" class="mw-redirect" title="JSTOR (identifier)">JSTOR</a> <a rel="nofollow" class="external text" href="https://www.jstor.org/stable/1053551">1053551</a>.</cite><span title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Ajournal&rft.genre=article&rft.jtitle=Southern+Economic+Journal&rft.atitle=A+Graphical+Exposition+of+the+Complete+Keynesian+System&rft.volume=23&rft.issue=2&rft.pages=%3Cspan+class%3D%22nowrap%22%3E115-%3C%2Fspan%3E125&rft.date=1956&rft_id=info%3Adoi%2F10.2307%2F1053551&rft_id=https%3A%2F%2Fwww.jstor.org%2Fstable%2F1053551%23id-name%3DJSTOR&rft.aulast=Smith&rft.aufirst=Warren+L.&rfr_id=info%3Asid%2Fen.wikipedia.org%3AIS%E2%80%93LM+model" class="Z3988"></span></li> <li><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1238218222" /><cite id="CITEREFVroeyHoover2004" class="citation book cs1">Vroey, Michel de; <a href="/wiki/Kevin_Hoover" title="Kevin Hoover">Hoover, Kevin D.</a>, eds. (2004). <i>The IS-LM model: Its Rise, Fall, and Strange Persistence</i>. Durham: Duke University Press. <a href="/wiki/ISBN_(identifier)" class="mw-redirect" title="ISBN (identifier)">ISBN</a> <a href="/wiki/Special:BookSources/978-0-8223-6631-7" title="Special:BookSources/978-0-8223-6631-7"><bdi>978-0-8223-6631-7</bdi></a>.</cite><span title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Abook&rft.genre=book&rft.btitle=The+IS-LM+model%3A+Its+Rise%2C+Fall%2C+and+Strange+Persistence&rft.place=Durham&rft.pub=Duke+University+Press&rft.date=2004&rft.isbn=978-0-8223-6631-7&rfr_id=info%3Asid%2Fen.wikipedia.org%3AIS%E2%80%93LM+model" class="Z3988"></span></li> <li><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1238218222" /><cite id="CITEREFYoungZilberfarb2000" class="citation book cs1">Young, Warren; Zilberfarb, Ben-Zion, eds. (2000). <a rel="nofollow" class="external text" href="https://link.springer.com/book/10.1007/978-94-010-0644-6"><i>IS-LM and Modern Macroeconomics</i></a>. Recent Economic Thought. Vol. 73. Springer Science & Business Media. <a href="/wiki/Doi_(identifier)" class="mw-redirect" title="Doi (identifier)">doi</a>:<a rel="nofollow" class="external text" href="https://doi.org/10.1007%2F978-94-010-0644-6">10.1007/978-94-010-0644-6</a>. <a href="/wiki/ISBN_(identifier)" class="mw-redirect" title="ISBN (identifier)">ISBN</a> <a href="/wiki/Special:BookSources/978-0-7923-7966-9" title="Special:BookSources/978-0-7923-7966-9"><bdi>978-0-7923-7966-9</bdi></a>.</cite><span title="ctx_ver=Z39.88-2004&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Abook&rft.genre=book&rft.btitle=IS-LM+and+Modern+Macroeconomics&rft.series=Recent+Economic+Thought&rft.pub=Springer+Science+%26+Business+Media&rft.date=2000&rft_id=info%3Adoi%2F10.1007%2F978-94-010-0644-6&rft.isbn=978-0-7923-7966-9&rft_id=https%3A%2F%2Flink.springer.com%2Fbook%2F10.1007%2F978-94-010-0644-6&rfr_id=info%3Asid%2Fen.wikipedia.org%3AIS%E2%80%93LM+model" class="Z3988"></span></li></ul> <div class="mw-heading mw-heading2"><h2 id="External_links">External links</h2><span class="mw-editsection"><span class="mw-editsection-bracket">[</span><a href="/w/index.php?title=IS%E2%80%93LM_model&action=edit&section=14" title="Edit section: External links"><span>edit</span></a><span class="mw-editsection-bracket">]</span></span></div> <style data-mw-deduplicate="TemplateStyles:r1235681985">.mw-parser-output .side-box{margin:4px 0;box-sizing:border-box;border:1px solid #aaa;font-size:88%;line-height:1.25em;background-color:var(--background-color-interactive-subtle,#f8f9fa);display:flow-root}.mw-parser-output .side-box-abovebelow,.mw-parser-output .side-box-text{padding:0.25em 0.9em}.mw-parser-output .side-box-image{padding:2px 0 2px 0.9em;text-align:center}.mw-parser-output .side-box-imageright{padding:2px 0.9em 2px 0;text-align:center}@media(min-width:500px){.mw-parser-output .side-box-flex{display:flex;align-items:center}.mw-parser-output .side-box-text{flex:1;min-width:0}}@media(min-width:720px){.mw-parser-output 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class="external text" href="http://web.mit.edu/krugman/www/islm.html">There's something about macro</a> – An explanation of the model and its role in understanding macroeconomics.</li> <li>Krugman, Paul. <a rel="nofollow" class="external text" href="https://krugman.blogs.nytimes.com/2011/10/09/is-lmentary/">IS-LMentary</a> – A basic explanation of the model and its uses.</li> <li>Wiens, Elmer G. <a rel="nofollow" class="external text" href="http://www.egwald.ca/macroeconomics/basicislm.php">IS–LM model</a> – An online, interactive IS–LM model of the Canadian economy.</li></ul> <div class="navbox-styles"><link rel="mw-deduplicated-inline-style" href="mw-data:TemplateStyles:r1129693374" /><style data-mw-deduplicate="TemplateStyles:r1236075235">.mw-parser-output .navbox{box-sizing:border-box;border:1px solid #a2a9b1;width:100%;clear:both;font-size:88%;text-align:center;padding:1px;margin:1em auto 0}.mw-parser-output .navbox .navbox{margin-top:0}.mw-parser-output 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style="font-size:114%;margin:0 4em"><a href="/wiki/Economics" title="Economics">Economics</a></div></th></tr><tr><th scope="row" class="navbox-group" style="width:1%"><a href="/wiki/Economics#Theoretical_research" title="Economics">Theoretical</a></th><td class="navbox-list-with-group navbox-list navbox-odd" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Microeconomics" title="Microeconomics">Microeconomics</a> <ul><li><a href="/wiki/Decision_theory" title="Decision theory">Decision theory</a></li> <li><a href="/wiki/Price_theory" class="mw-redirect" title="Price theory">Price theory</a></li> <li><a href="/wiki/Game_theory" title="Game theory">Game theory</a></li> <li><a href="/wiki/Contract_theory" title="Contract theory">Contract theory</a></li> <li><a href="/wiki/Mechanism_design" title="Mechanism design">Mechanism design</a></li></ul></li> <li><a href="/wiki/Macroeconomics" title="Macroeconomics">Macroeconomics</a></li> <li><a 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title="Econometrics">Econometrics</a> <ul><li><a href="/wiki/Economic_statistics" title="Economic statistics">Economic statistics</a></li></ul></li> <li><a href="/wiki/Experimental_economics" title="Experimental economics">Experimental economics</a></li> <li><a href="/wiki/Economic_history" title="Economic history">Economic history</a></li></ul> </div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%"><a href="/wiki/Applied_economics" title="Applied economics">Applied</a></th><td class="navbox-list-with-group navbox-list navbox-odd" style="width:100%;padding:0"><div style="padding:0 0.25em"> <div class="excerpt-block"><div class="excerpt"> <ul><li><a href="/wiki/Agricultural_economics" title="Agricultural economics">Agriculture</a></li> <li><a href="/wiki/Business_economics" title="Business economics">Business</a></li> <li><a href="/wiki/Cultural_economics" title="Cultural economics">Cultural</a></li> <li><a href="/wiki/Demographic_economics" title="Demographic economics">Demographic</a></li> <li><a href="/wiki/Development_economics" title="Development economics">Development</a></li> <li><a href="/wiki/Ecological_economics" title="Ecological economics">Ecological</a></li> <li><a href="/wiki/Education_economics" title="Education economics">Education</a></li> <li><a href="/wiki/Engineering_economics" title="Engineering economics">Engineering</a></li> <li><a href="/wiki/Environmental_economics" title="Environmental economics">Environmental</a></li> <li><a href="/wiki/Evolutionary_economics" title="Evolutionary economics">Evolutionary</a></li> <li><a href="/wiki/Financial_economics" title="Financial economics">Financial</a></li> <li><a href="/wiki/Economic_geography" title="Economic geography">Geographic</a></li> <li><a href="/wiki/Happiness_economics" title="Happiness economics">Happiness</a></li> <li><a href="/wiki/Health_economics" title="Health economics">Health</a></li> <li><a href="/wiki/Economic_history" title="Economic history">History</a></li> <li><a href="/wiki/Information_economics" title="Information economics">Information</a></li> <li><a href="/wiki/Institutional_economics" title="Institutional economics">Institutions</a></li> <li><a href="/wiki/Labour_economics" title="Labour economics">Labour</a></li> <li><a href="/wiki/Law_and_economics" title="Law and economics">Law</a></li> <li><a href="/wiki/Managerial_economics" title="Managerial economics">Management</a></li> <li><a href="/wiki/Organizational_economics" title="Organizational economics">Organization</a></li> <li><a href="/wiki/Economics_of_participation" title="Economics of participation">Participation</a></li> <li><a href="/wiki/Personnel_economics" title="Personnel economics">Personnel</a></li> <li><a href="/wiki/Economic_planning" title="Economic planning">Planning</a></li> <li><a href="/wiki/Economic_policy" title="Economic policy">Policy</a></li> <li><a href="/wiki/Public_economics" title="Public economics">Public sector</a></li> <li><a href="/wiki/Public_choice" title="Public choice">Public choice</a></li> <li><a href="/wiki/Social_choice" class="mw-redirect" title="Social choice">Social choice</a></li> <li><a href="/wiki/Regional_economics" title="Regional economics">Regional</a></li> <li><a href="/wiki/Natural_resource_economics" title="Natural resource economics">Resources</a></li> <li><a href="/wiki/Rural_economics" title="Rural economics">Rural</a></li> <li><a href="/wiki/Service_economy" title="Service economy">Service</a></li> <li><a href="/wiki/Transport_economics" title="Transport economics">Transport</a></li> <li><a href="/wiki/Urban_economics" title="Urban economics">Urban</a></li> <li><a href="/wiki/Welfare_economics" title="Welfare economics">Welfare</a></li></ul></div></div> </div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%"><div style="display: inline-block; line-height: 1.2em; padding: .1em 0;"><a href="/wiki/Schools_of_economic_thought" title="Schools of economic thought">Schools</a><br />(<a href="/wiki/History_of_economic_thought" title="History of economic thought">history</a>)<br /></div></th><td class="navbox-list-with-group navbox-list navbox-even" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Attention_economy" title="Attention economy">Attention</a></li> <li><a href="/wiki/Mainstream_economics" title="Mainstream economics">Mainstream</a></li> <li><a href="/wiki/Heterodox_economics" title="Heterodox economics">Heterodox</a></li> <li><a href="/wiki/American_School_(economics)" title="American School (economics)">American (National)</a></li> <li><a href="/wiki/Ancient_economic_thought" title="Ancient economic thought">Ancient thought</a></li> <li><a href="/wiki/Anarchist_economics" class="mw-redirect" title="Anarchist economics">Anarchist</a> <ul><li><a href="/wiki/Mutualism_(economic_theory)" title="Mutualism (economic theory)">Mutualism</a></li></ul></li> <li><a href="/wiki/Austrian_School" class="mw-redirect" title="Austrian School">Austrian</a></li> <li><a href="/wiki/Behavioral_economics" title="Behavioral economics">Behavioral</a></li> <li><a href="/wiki/Buddhist_economics" title="Buddhist economics">Buddhist</a></li> <li><a href="/wiki/Chartalism" title="Chartalism">Chartalism</a> <ul><li><a href="/wiki/Modern_monetary_theory" title="Modern monetary theory">Modern monetary theory</a></li></ul></li> <li><a href="/wiki/Chicago_school_of_economics" title="Chicago school of economics">Chicago</a></li> <li><a href="/wiki/Classical_economics" title="Classical economics">Classical</a></li> <li><a href="/wiki/Critique_of_political_economy" title="Critique of political economy">Critique of political economy</a></li> <li><a href="/wiki/Economic_democracy" title="Economic democracy">Democratic</a></li> <li><a href="/wiki/Disequilibrium_macroeconomics" title="Disequilibrium macroeconomics">Disequilibrium</a></li> <li><a href="/wiki/Ecological_economics" title="Ecological economics">Ecological</a></li> <li><a href="/wiki/Evolutionary_economics" title="Evolutionary economics">Evolutionary</a></li> <li><a href="/wiki/Feminist_economics" title="Feminist economics">Feminist</a></li> <li><a href="/wiki/Georgism" title="Georgism">Georgism</a></li> <li><a href="/wiki/Happiness_economics" title="Happiness economics">Happiness</a></li> <li><a href="/wiki/Historical_school_of_economics" title="Historical school of economics">Historical</a></li> <li><a href="/wiki/Humanistic_economics" title="Humanistic economics">Humanistic</a></li> <li><a href="/wiki/Institutional_economics" title="Institutional economics">Institutional</a></li> <li><a href="/wiki/Keynesian_economics" title="Keynesian economics">Keynesian</a> <ul><li><a href="/wiki/Neo-Keynesian_economics" class="mw-redirect" title="Neo-Keynesian economics">Neo-</a> (<a href="/wiki/Neoclassical_synthesis" title="Neoclassical synthesis">neoclassical–Keynesian synthesis</a>)</li> <li><a href="/wiki/New_Keynesian_economics" title="New Keynesian economics">New</a></li> <li><a href="/wiki/Post-Keynesian_economics" title="Post-Keynesian economics">Post-</a> <ul><li><a href="/wiki/Monetary_circuit_theory" title="Monetary circuit theory">Circuitism</a></li></ul></li></ul></li> <li><a href="/wiki/Malthusianism" title="Malthusianism">Malthusianism</a></li> <li><a href="/wiki/Marginalism" title="Marginalism">Marginalism</a></li> <li><a href="/wiki/Marxian_economics" title="Marxian economics">Marxian</a> <ul><li><a href="/wiki/Neo-Marxian_economics" class="mw-redirect" title="Neo-Marxian economics">Neo-</a></li></ul></li> <li><a href="/wiki/Mercantilism" title="Mercantilism">Mercantilism</a></li> <li><a href="/wiki/Mixed_economy" title="Mixed economy">Mixed</a></li> <li><a href="/wiki/Neoclassical_economics" title="Neoclassical economics">Neoclassical</a> <ul><li><a href="/wiki/Lausanne_School" title="Lausanne School">Lausanne</a></li></ul></li> <li><a href="/wiki/New_classical_macroeconomics" title="New classical macroeconomics">New classical</a> <ul><li><a href="/wiki/Real_business-cycle_theory" title="Real business-cycle theory">Real business-cycle theory</a></li></ul></li> <li><a href="/wiki/New_institutional_economics" title="New institutional economics">New institutional</a></li> <li><a href="/wiki/Physiocracy" title="Physiocracy">Physiocracy</a></li> <li><a href="/wiki/Socialist_economics" title="Socialist economics">Socialist</a></li> <li><a href="/wiki/Stockholm_School_(economics)" title="Stockholm School (economics)">Stockholm</a></li> <li><a href="/wiki/Supply-side_economics" title="Supply-side economics">Supply-side</a></li> <li><a href="/wiki/Thermoeconomics" title="Thermoeconomics">Thermo</a></li></ul> </div></td></tr><tr><th scope="row" class="navbox-group" style="width:1%"><div style="display: inline-block; line-height: 1.2em; padding: .1em 0;"><a href="/wiki/Economist" title="Economist">Economists</a><br /></div></th><td class="navbox-list-with-group navbox-list navbox-odd" style="width:100%;padding:0"><div style="padding:0 0.25em"> <ul><li><a href="/wiki/Bernard_de_Mandeville" class="mw-redirect" title="Bernard de Mandeville">de Mandeville</a></li> <li><a href="/wiki/Fran%C3%A7ois_Quesnay" title="François Quesnay">Quesnay</a></li> <li><a href="/wiki/Adam_Smith" title="Adam Smith">Smith</a></li> <li><a href="/wiki/Thomas_Robert_Malthus" title="Thomas Robert Malthus">Malthus</a></li> <li><a href="/wiki/Jean-Baptiste_Say" title="Jean-Baptiste Say">Say</a></li> <li><a href="/wiki/David_Ricardo" title="David Ricardo">Ricardo</a></li> <li><a href="/wiki/Johann_Heinrich_von_Th%C3%BCnen" title="Johann Heinrich von Thünen">von Thünen</a></li> <li><a href="/wiki/Friedrich_List" title="Friedrich List">List</a></li> <li><a href="/wiki/Fr%C3%A9d%C3%A9ric_Bastiat" title="Frédéric Bastiat">Bastiat</a></li> <li><a href="/wiki/Antoine_Augustin_Cournot" title="Antoine Augustin Cournot">Cournot</a></li> <li><a href="/wiki/John_Stuart_Mill" title="John Stuart Mill">Mill</a></li> <li><a href="/wiki/Hermann_Heinrich_Gossen" title="Hermann Heinrich Gossen">Gossen</a></li> <li><a href="/wiki/Karl_Marx" title="Karl Marx">Marx</a></li> <li><a href="/wiki/L%C3%A9on_Walras" title="Léon Walras">Walras</a></li> <li><a href="/wiki/William_Stanley_Jevons" title="William Stanley Jevons">Jevons</a></li> <li><a href="/wiki/Henry_George" title="Henry George">George</a></li> <li><a href="/wiki/Carl_Menger" title="Carl Menger">Menger</a></li> <li><a href="/wiki/Alfred_Marshall" title="Alfred Marshall">Marshall</a></li> <li><a href="/wiki/Francis_Ysidro_Edgeworth" title="Francis Ysidro Edgeworth">Edgeworth</a></li> <li><a href="/wiki/John_Bates_Clark" title="John Bates Clark">Clark</a></li> <li><a href="/wiki/Vilfredo_Pareto" title="Vilfredo Pareto">Pareto</a></li> <li><a href="/wiki/Eugen_von_B%C3%B6hm-Bawerk" title="Eugen von Böhm-Bawerk">von Böhm-Bawerk</a></li> <li><a href="/wiki/Friedrich_von_Wieser" title="Friedrich von Wieser">von Wieser</a></li> <li><a href="/wiki/Thorstein_Veblen" title="Thorstein Veblen">Veblen</a></li> <li><a href="/wiki/Irving_Fisher" title="Irving Fisher">Fisher</a></li> <li><a href="/wiki/Arthur_Cecil_Pigou" title="Arthur Cecil Pigou">Pigou</a></li> <li><a href="/wiki/Eli_Heckscher" title="Eli Heckscher">Heckscher</a></li> <li><a href="/wiki/Ludwig_von_Mises" title="Ludwig von Mises">von Mises</a></li> <li><a href="/wiki/Joseph_Schumpeter" title="Joseph Schumpeter">Schumpeter</a></li> <li><a href="/wiki/John_Maynard_Keynes" title="John Maynard Keynes">Keynes</a></li> <li><a href="/wiki/Frank_Knight" title="Frank Knight">Knight</a></li> <li><a href="/wiki/Karl_Polanyi" title="Karl Polanyi">Polanyi</a></li> <li><a href="/wiki/Ragnar_Frisch" title="Ragnar Frisch">Frisch</a></li> <li><a href="/wiki/Piero_Sraffa" title="Piero Sraffa">Sraffa</a></li> <li><a href="/wiki/Gunnar_Myrdal" title="Gunnar Myrdal">Myrdal</a></li> <li><a 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